Do anything, but don't do this!
A sure way to guarantee pain
Meatloaf said it best when he said "do anything for love, but I won't do that..." RIP 2022! The first few weeks in 2022 have reminded us all that stocks can actually lose money. That's right, news flash, stocks can be volatile, lose money and make you feel like you're on a rollercoaster that'll make you sicker than a long weekend of binge drinking with your college roommates. It's a reminder of us all to do a few things like take inventory of our assets, revisit our goals, take a look at our comfort and ensure things haven't change at all with our time horizon. In most cases, nothing has changed other than the landscape of the market and the realization that it's a market of stocks and not necessarily a stock market. There are sectors, stocks, funds, etf's, alternatives and all sorts of investment options available to us all. Some look great this year and they'll be thrown out in the trash like those brown bananas sitting on your counter that no-one wants to eat or deal with.
If you've been paying attention to the market, listening to the Podcast, reading the blogs or even turn on the tv, you already know what's going on. So, what should you be doing or what should your advisor be doing right now? We're so glad you asked. You need to take action if you haven't already. Not every sector, not every stock is down. Yes, there are investments that are actually making money in this environment. It's a different year, with new challenges than last and change that comes about much quicker than you can imagine. For most do it yourself investors, they react to a market that has already began it's rotation.
What's getting hit the worst? Seems like just about everything across the board is down these days. If we look at the three major indices, all are down as of me writing this blog. Looking at these numbers in such a short period of time has most of us glazing it over and the feeling of fear and panic starts to set it. Don't do it. Don't think for a minute that you can be a hero, go to 100% cash then get back in at "just the right time". It won't happen. We've been doing this too long to see many failed attempts despite conventional wisdom and understanding that markets are cyclical. Take a look at the year to date performance of three etf's in to give some perspective on what's doing what so far.
For those of you keeping score at home, it's pretty easy to see that the tech sector as a whole is suffering. What to do if you haven't already? Look at what you own, understand what they're doing right and what they're not. Research the companies financials, listen to their earnings calls and come to a conclusion on your comfort level in still owning that company. Most of all, you don't have to go at it alone. You should have a trusted person to go to with questions and concerns you're feeling about the market or specific positions. That person should be us, but even if it's not, it should be someone who is there to talk you through the holdings and taking action when necessary. It doesn't have to be a game of hide and seek with your financial advisor or money manager - they should be accessible during good times and bad!
At the end of the day, market volatility should be a time to look for opportunity and reshuffle things. It's NOT a complete reset. What you absolutely should not do is sell your stocks, run for the hills and take cover. It simply means small, meaningful tweaks to adjust to the current market conditions. For our podcast listeners this isn't news at all. This theme and trend started in February of 2021. Looming interest rate hikes have had a hand in this as well.
Some of the newer challenges this year are just now beginning to develop. If those aspects begin to materialize, that could bring about further change. With this type of market, algorithms, automated trading systems and passive index funds may leaving you hungry for more. More money, better returns and an actual human to talk you through these tough decisions. There are some aspects of the market that look fairly priced and even somewhat cheap. Know what those are, discuss with your advisor and implement. The market doesn't wait and technical analysis tends to be a leading indicator where as fundamentals can sometimes need to play catchup. I learned a long time ago, a came of Ketchup ball can be quite messy!
And that's only the beginning...Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals.
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