In a perfect world, returns would always be up and returns would be highly stable.
As I like to joke, “I can’t wait to go to Heaven someday where markets always go up for advisors.” Unfortunately, this earth is not heaven and we must deal with the realities that markets don’t always go up as expected and where volatility of investment returns is the norm. So with that in mind, here are Three things to ponder when you review your investment statements this month: First, focus on your goals, not your returns. Your long-term goals are why you invest in the first place so focus on whether you are progressing towards those goals and not on whether you kept up with the S&P 500 or NASDAQ Indexes. Second, realize that being diversified can actually hurt your returns in some markets. This is one of those markets where being diversified is actually hurting investors as a narrow group of stocks are really driving most returns for the major indexes. However, also realize when a narrow group of stocks is driving market returns this is not healthy and this usually signals we are in the final innings of this up move for the market. In the future, you will be glad to be diversified as those who chased performance in these few stocks get their heads handed to them. Third, not all ways of managing money do well all the time. Institutional investors know this and therefore include differing styles of money management in their portfolios. As an example, actively managed portfolios have struggled with the Central Bankers’ constant intervention in the market. The danger is that you start chasing investment strategies that rely on Central Banks continuing to intervene in the markets only to see them exhaust their monetary tools or even back away from their support. It’s not easy to make money today! Patience and a long-term focus is required. However, if you can stay the course, you will be rewarded! Please let us know if we can help you stay focused on the goal. We offer a free Second Opinion if you think you may be off course.
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