When the financial markets seem to be in turmoil and account balances start to fall, there can be a strong temptation to ask us to “do something” to stem any perceived losses. Yet it is often the case that staying the course−or doing nothing−proves to be the better plan.
Here is one example: A hypothetical 60% stock/40% bond portfolio that stood at $1 million on the morning of November 1, 2018, would have lost 5.7% of its value by Christmas Eve. Yet selling the portfolio at that time and fleeing the markets, even briefly, would have cost an investor tens of thousands of dollars in two months, versus the alternative of staying invested.
When faced with a similar situation, consider how you might feel if markets rebounded and you could have recouped all your money, and more. That’s why it’s best to stick to your long-term plan you and your advisor have built. Any changes should be made because of changes in your life, not changes in the markets. If you have questions about making portfolio moves, remember to talk to us before acting.