Market’s Future: How Would You React Tomorrow If You Didn’t Act Today?
by Michelle Smalenberger / June 3, 2021
It’s typical human nature to put something off just one more day. When we do it can leave us with anxiety or feeling stressed. This is very common for people to feel about the market’s future.
In reality, no one knows the future. Many people try to predict it but no one knows what tomorrow will bring. So we do our best to make wise choices and decisions based on what we do know and what history shows us.
Even though we don’t know what’s ahead we still make decisions in other areas of our life to be prepared for it.
Here are a few examples:
- We exercise or eat healthy because we know we aren’t getting any younger.
- You visit your doctor to make sure your health is still in good order.
- You maintain your car with an oil change to make it last as long as you can.
It’s not any different with investing! In order to keep us from facing negative outcomes when investing we do a variety of things:. Maybe these are some ways you can make progress today too.
1. Keep a diversified portfolio.
This means that you have investments in a variety of asset classes not just everything in one place. You keep a variety of cash, bonds, stocks, commodities. And within the stocks that you own you hold a variety of companies over a wide span of industries and countries. Perhaps you’ve heard it said that keeping a diversified portfolio means always having to say you’re sorry.
For example, when the market is performing well, as it has for a strong ten plus years now, then holding something like gold hasn’t always been performing well over that same period. But recently gold has started performing well again! You see, they take turns outperforming at various times. This is why we continue to rebalance client portfolios based on how the different asset classes are performing.
2. Maintain a barbell strategy
Specifically, in investing with bonds there is a strategy known as the barbell strategy. This simply means that you own some short-term and long-term bonds to stretch over your lifetime. You benefit from different characteristics of each length of maturity to help your overall portfolio.
3. Reassess your time horizon
Given the market’s recent volatility we have continued to rebalance client accounts. We’ve also made changes between different types of funds to protect against inflation, for example. If you’ve been putting everything into stocks and pushing your risk level it could be time for you to adjust those gains back to provide some diversification.
Again, no one knows the market’s future, but these are things to keep in mind whenever investing. We hope you choose to take a positive step during these high levels in the market and get a professional’s help. Don’t be in a position where you waited one day too long and it affects the success of your goals.
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Contact us today for a free 30-minute consultation!