I know many of your are concerned about the fluctuations and volatility in the stock market and I want to reassure you that your portfolios (assuming you are taking advice from me) have been designed to weather these occasional storms. Rather than give you anecdotal tips, I want to lay
out the specific ways that your portfolio is handling the situation right now.
Most investors fall into two categories. We are either in an Accumulation Phase or an Income Phase.
If you are in the Accumulation Phase (still working and contributing to your retirement accounts), you are now scooping up some very discounted shares. The exact same shares that have been increasing in value exponentially over the last decade and, most recently, over the
last few years. In your case, if you are looking at the activity in your accounts, you will see that the number of shares you have of each of your investments is either staying the same or increasing. In this sense, it’s important to remember that you are not “losing” anything. What’s
happening is that the values of the underlying shares are adjusting downward at the moment, but your portfolio is increasing in volume. Scooping up these cheap shares now helps you recover quicker when prices turn in the opposite direction, which they always do. Every time. After every correction. Without exception.
If you are in the Income Phase and no longer contributing to and/or are taking distributions from your retirement accounts, then you are most likely taking those distributions from the income that’s being generated in the form of interest, dividends and capital gains. If you’ve seen me recently, this is something that we would have set up in your accounts by having the income put into your money market funds for safe keeping, for exactly this scenario. In your case, while you may not see the number of shares increasing, you will see the income being generated. And while you might not be seeing your share numbers increase, you are also not seeing them decrease. Only the underlying values are being effected. If you sell your investments now, indiscriminately, then you are limiting your ability to generate the income you need to live off of.
I know there is always the temptation to DO something in times of uncertainty and volatility and these are certainly volatile times. However, all I ask is that you schedule a time to talk before taking action to ensure it is the right thing for your situation. There is always something we can
do to make us feel better without causing harm. We’ve been here before. I know it seems different, every correction does in the beginning stages. But, after being in this business for 20 years, I’m not about to change strategies now.
Take a walk. Turn off the news. Meditate or simply take deep breaths to calm your mind. This, too, shall pass and better days are ahead. I promise!