In the last couple of months I’ve had many conversations with clients about the recent turbulence in the stock market. It seems like headlines these days can come out of nowhere and cause the market to sell off.
Today these headlines seem to be centered around tariffs, potential trade wars, and rising interest rates. These headlines can make people question their investment plans—but should we actually be reacting to these headlines this way?"
As you’ll see in the video above, I’ve included a chart showing a market summary for the S&P 500 from 2009 until now. Within the chart, you will notice a few shaded areas indicating periods of volatility in the market. This includes a six-month period in 2010, a 10-month period in 2011, and a 14-month period from 2015 to 2016. Now, with those periods in mind, I’d like to ask two questions: Can you remember which headlines caused those bouts of volatility? And did you react?
As investors, we’ve got to come to grips with what our true risk tolerance is. This isn’t something you simply fill out a form to determine; you’ve got to truly understand what you can withstand regarding volatility in your portfolio. Of course, someday we’ll see a true tough economy and a bear market. There might even be a significant geopolitical crisis. These things can and will produce market volatility. So, before they do, understand what you can withstand.
But remember that we’ve come back from these kinds of things before. If you think about it, the leading companies of today weren’t even around 15 or 20 years ago. New technologies always emerge.
So my message is this: Volatility isn’t new. You’ve got to know yourself in terms of risk tolerance. While the market is at or near all-time highs, now may be a great time to review your situation so that you can withstand potential adverse market changes.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon
Just got off the phone with a client age 59 who wanted to come in and review his allocation towards the stock market. He has his investments in a few different locations and doesn’t know what his overall allocation is. He said “at 59 years old, I could very well be at 80% stocks now and I think that is too high.”
When was the last time you reviewed your asset allocation for all your investment accounts?
I’m talking about your current 401k and older 401k’s from previous jobs, your IRA’s, Roth IRA’s, and traditional brokerage accounts.
In times of rising stock markets complacency can set in and whereas you were initially comfortable to have 65% of your investments in the stock market, now, due to rising markets you could be at 75%.
Each year I recommend you review your allocation and rebalance your portfolio towards your target allocation.
*Diversification and asset allocation do not ensure a profit or protect against a loss. Keep in mind that there is no assurance that any strategy will ultimately be successful or profitable nor protect against a loss.
As this is my maiden blog post, I wanted to take the opportunity to welcome you to my site- My name is Frank Iryami, I am a financial advisor with Raymond James based in Syosset, NY – I have been a financial advisor for more than 22 years.
I’m going to use this blog in the future to explain how I deal with various client issues that come up throughout the course of my days and weeks, in the hopes that some of the topics I'll address are your concerns and maybe I can help you plow through and move forward.
The way I see my role as a financial advisor is to very simply help you build your savings so that you can live the life you want. Most of us today have to build our own nest egg that will be able to outlive us. Employer provided pensions rarely exist. As your financial advisor a lot of my time and energy goes towards helping clients stay on track; Helping you ignore the noise of the day and sticking to our agreed upon plan.
Here is my view of what I cannot do (nor do I think any financial advisor can promise to do) - We cannot predict the movements of the stock market, we cannot predict the course of interest rates, we do not know when the economy will slump or surge, and we do not know how the markets will respond to various geopolitical events. There are many in our industry that waste a considerable amount of time and energy trying to do all of these, in my opinion you don’t need to know the answers to these questions to build your nest egg.
In order to build your nest egg and real wealth, you need a long term view:
Trying to get rich quick is not a good way to build wealth either, like buying real estate coming out of foreclosure, unless of course, you have a certain competency in that. Knowing your financial strengths and weaknesses is key to building wealth.
An example of knowing your strengths: I have never bought real estate with the hopes of trying to make money. I am sure it can be done, I just know that I don’t have the right knowledge or experience in that area. So, I just stay away from it. I won’t get lured into a real estate deal unless I completely understand how it works and quite frankly, I will probably turn away from it because I have my hands full doing what I know how to do. This may seem like common sense, and it is, but I have seen people lose money by trying something. Sometimes they dig a very large hole that can take many years to climb out of.
Time is your friend in building wealth. The more time you have working for you, the better the chances of building a larger nest egg to fund the life of your dreams.
*The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Frank Iryami and not necessarily those of RJFS or Raymond James.
A Note from frank...
I’m going to use this blog in the future to explain how I deal with various client issues that come up throughout the course of my days and weeks, in the hopes that some of their concerns and questions are your concerns and maybe I can help you plow through and move forward. READ MORE