Financial Markets Don’t Come with Traffic Signals

Blog post #414

It is unfortunate, but true.  There are not financial traffic lights that signal “green,” it’s all clear now…you can proceed to enter the stock market with no risk.

There are no reliable financial traffic lights that signal “red” and tell you accurately and repeatedly when you should be exiting the stock market.

There are not even “yellow” caution traffic lights, that can accurately and consistently warn you of impending downturns in the stock market.

So, how can you handle the volatility that comes with investing in stocks?

We discuss this topic with you, as clients.  As your advisor and guide, we want you to be prepared for market downturns, as they can occur at any time.  While we don’t have traffic lights, we can help you deal with the volatility you experience on your investment journey.

You should have a written financial plan. It does not need to be fancy. Working with us, we will prepare a financial plan for you and help you adhere to the plan, through the ups and downs of the financial markets. Your written financial plan should provide an asset allocation that makes sense for you and your family, for whatever short and long term financial goals you have. We develop this plan for you, and decide how much to allocate to fixed income (cash, bonds, CDs) and how much to invest in stocks, and where, such as US, international, emerging markets and real estate.

So what about now? What is going on? What should you do?

Part of our philosophy is recognizing that we do not have a crystal ball and that we cannot predict the future. That being said, we are realistic and optimistic, for the long term. History teaches us that if you are a patient, globally diversified investor, you will be rewarded. Companies, people and countries innovate and are resilient.

As Warren Buffett has stated, “Mr. Market” is usually too optimistic or too pessimistic. Some type of uncertainty always exists. That will not change. We focus on what we can control. We plan and focus for the long term.

Timing the market does not work. We wish we had a crystal ball. We wish we had the perfect financial traffic light. But that is not reality.

Instead, we have a solid investment philosophy (which is not based on predictions and guess work) and financial planning skills that can provide you, our clients, with a sense of comfort and financial security to help you reach and maintain your financial and lifestyle goals.

Talk to us.

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