US stock markets have gone nearly straight upwards since the November 8th Presidential election.
In the last 3 1/2 months, there have not been any significant declines of major US stock indices. There has rarely even been a day when markets were down 1%.
Thus, you should be prepared for some YELLOW territory, or proceed with caution.
We are not making any stock market predictions, just pointing out that you should be mentally prepared for more volatility than we have had recently.
Down periods are normal, even in the midst of generally rising markets. Declines can occur quickly, without warning.
Dips or declines may come from economic news, unexpected events or missed expectations, such as if there was a significant delay in the Trump tax reform package, which the new Treasury Secretary hopes will be passed by Congress prior to Labor Day.
For the long term, we remain rationally optimistic, so GREEN is appropriate. For long term investors, you should maintain your appropriate allocation to stocks.
As markets have increased, we have rebalanced your portfolio, where applicable, so that you do not take on unnecessary stock risk. This is how we implement our discipline of buying low and doing some selling high.
We do not believe in RED. We do not recommend trying to time the markets, by getting completely out of the markets because they have increased and then trying to buy back in at a lower price. This is a loser’s game.
While US and international developed country stock markets have performed well so far in 2017, emerging stock markets (those of lesser developed countries) have more than doubled the returns of the larger countries’ stock markets.
This is why we believe in holding globally diversified portfolios and why we recommend allocations to emerging market stocks. These markets can be quite volatile but have higher expected long term returns.
As you proceed on your financial road, maintaining an appropriate stock allocation will lead to GREEN rewards, as long as you can handle the periods of YELLOW, when caution and good judgement are necessary.
We will advise and guide you, as you navigate the financial path of your future.