It has been a while since the markets have had a meaningful correction. Over the last 3 years the only meaningful pull back was last fall when the S&P 500 dropped from 2.011 to 1,862; a little over 7% decline.
Most Money Managers would welcome a nice pull back so they could invest a few more dollars into their most favorite companies. They would love to pick up a bargain. As volatility returns to the market; as it most certainly will, there are 7 things investors should remember:
- Stick with your long-term plan (Short-term market fluctuations should not be a concern when you have a sound financial plan.
- Look beyond today’s markets (No one can predict what the market will do or when, so think of it as a store-prices increase when demand is high and drops when demand is low. The long-term trend is upward).
- Don’t let media headlines distract you from your plan (The media focuses on “Now” and not the long-term).
- Avoid chasing the latest trends (Jumping from one investment to another can hurt your long-term performance).
- Accredited professionals are the best managers (Your portfolio is diversified among a number of investments, and managed by highly qualified portfolio managers).
- If your objectives have not changed, neither should your investments (The investments in your portfolio were chosen because they were compatible with your long-term goals).
- Volatility is the friend of the long-term investor (Market will offer up great bargains from time to time allowing a portfolio manager to add to some of his best investment to create a great long-term return).
So, again as volatility returns, remember your goals, and don’t let short-term events cause you to disrupt your long-term plans.
Paul Fisher - CFP