It’s been a tough week for the markets. Hopefully, you have an investment strategy that focuses on the big picture and takes some of the sting out of this kind of news. If you do, then feel free to stop reading here (if you’re one of our clients, you’re in that camp). But we feel it’s our duty to put market news in perspective, especially when the media reports particularly steep, global market declines like they have been recently.
If you’re okay with ignoring the current headlines and going about your business according to your carefully developed Investment Policy Statement, feel free to continue as you were. If you want to revisit your own risk tolerances or individual financial goals, we’re here to help. Otherwise, carry on.
If, on the other hand, you’re wondering whether you should adjust your investments in light of current events, allow me to offer some context on why staying the course, even with today’s bad market news can actually translate into good news for you and your investments in the long run.
This week’s market performance is Exhibit A on just what risk feels like when it happens. It hurts, it can be scary and it’s no fun. But if these sorts of events never occurred, the market would not be able to deliver the types of long-term returns that we have seen in the past. The key to this though, is that the people who are able to harvest those returns are long term investors, who are willing to ride out the pain.
Think of investing in the markets as being like going to the dentist. You probably don’t enjoy getting your teeth cleaned, having a cavity filled or undergoing a root canal. But these unpleasant experiences are necessary to preserve and sometimes improve your winning smile. Just as your dentist offers pain mitigation strategies as appropriate, diversification and an appropriate asset allocation are our prescribed pain-killing medicines to help lessen, if not eliminate the hurt when it occurs.
Big-picture strategy aside, you may still have questions about the unfolding news that is grabbing current headlines: China’s devalued currency, the Fed’s plans on U.S. interest rates, declining oil prices, ongoing uncertainty in Greece, and so on.
Breaking financial and economic news doesn’t overly influence our long-term advice, but we do find it fascinating. It contributes to our ongoing understanding of how markets operate over time. If we can share insights on these or other questions you may have about what makes the markets tick, we would love to talk any time.
McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.
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