Market Volatility is back in a big way this first quarter of 2018. So too then is our volatility mantra, “Do Nothing.” As we shared last month via Nick Murray’s Client Corner, Why ask Why, “unsuccessful investors react: they make significant changes to their portfolios in response to real or imagined economic or market crises…” Included are crises such as the market sell off in January & February of this year, the “trade war” sell off from March 22nd, the China meltdown of January 2016…the list goes on and on.
You may be saying to yourself, “Fine, staying the course and not reacting to the daily market fluctuations makes sense for someone who is still saving for retirement, but what about the folks who are near retirement or are already retired, certainly they should do something different rather than stay the course, right?”
While there may be no worse feeling as a pre-retiree or retiree than to watch your portfolio value fluctuate, sometimes violently in a short period of time, the best course of action is to do nothing in the short term. As Oscar Wilde said, “To do nothing at all is the most difficult thing in the world, the most difficult and the most intellectual.”
While we will gladly use those words to our advantage to bolster our philosophy of how one should react to short term market volatility, in looking ahead at the future you MUST do something.
Having a solid financial plan, which serves as the blueprint for your investment portfolio, is crucial for short and long term financial success. An investment strategy needs purpose and with purpose will follow a greater probability of success. Having your money positioned and invested for the short-term, mid-term and long-term will ensure you’re taking on the right amount of volatility, for a specific need or goal, which leads one to being “mentally” more comfortable with market gyrations.
We know fighting the urge to do something isn’t easy. If it were, most people wouldn’t need us, but as long as there is market volatility and irrational human responses to that volatility, our mantra remains.
Here are the links to all of the blogs we have written dating back to 2014 about staying the course and not reacting to market volatility. Imagine if you “did something” along the way. Where would your portfolio be today?