Investors may wonder how to react to market movements after a week like the one just ended. When markets decline so quickly, our “fight or flight” instinct suggests flight, but it’s not at all clear what has caused the sudden reversal that we’ve seen this week, whether it will last or how long it will last. So, for a long term oriented investor with a properly diversified portfolio, the best answer is often to stand pat.
Even the sudden drop that we’ve seen this week is not unusual in the history of market returns. While stocks are not cheap right now, neither are they expensive in historical terms. JP Morgan’s David Kelly has likened current prices to driving 72 in a 70 MPH zone. No need to take drastic action, the future outlook is still relatively positive. Above all, remember that no one knows what will happen next, diversification and patience should be the order of the day.
Barry Ritholtz, a blogger and professional money manager just published a good article examining the question “Is the Bull Market Over?” He’s not ready to reach this conclusion yet and he provides a thoughtful discussion of the economic factors to consider, from the US to China To read the article, click here.
If you have concerns about he market or your portfolio in particular, please call us and we’ll be happy to discuss them with you.
Horizon Wealth Advisors is a Houston based fee-only wealth management firm. Horizon is a fiduciary advisor. We specialize in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.