Look Back For Change: Investment Appetite

We typically think to look forward when we want to see financial change.  But have you ever looked back at the past to see if anything has changed that could affect the future outlook?  Let’s consider our thoughts prior to the midterm elections and whether anything has changed that affects our thoughts ahead.

Gridlock Prediction

You’ll remember that directly following the Charles Schwab & Co., Inc annual conference we wrote  of all we learned and how it shaped our view ahead.  We described our belief that there would be increased gridlock and little progress due to the balance of power expected. This expectation did come to be and we are seeing the gridlock in the continued government shutdown that is now beyond 34 days in length.  It doesn’t appear to be waning any time soon either.

Does the shutdown actually allow for progress ahead?  It certainly can. We think; however, many people feel as though precious time for progress is being lost.  You may feel this way because of the length of time until the goal you were planning to act on. And with the shutdown it may be affecting the point in time that you can realize that dream or goal.

Election Reflection

We don’t see any significant changes to our outlook from what we expected could happen prior to the elections.  In looking back we don’t recognize major changes to cause any big changes for our outlook ahead.  We do hope for progress to begin happening soon. But the tensions that we see are all similar where there are strong personalities involved and everyone wants to win.

Investment Appetite

“I’m somewhere between giving up and seeing how much more I can take.” – Picturequotes.com

Does the quote above describe your state of mind?  As time lingers and progress continues to stall, use this time to get clear of your appetite for investing and risk level to achieve your goals.  Two questions can help you gain some clarity in answering the question:

1. Am I so uncomfortable with the market volatility that I just want to move to less volatile assets or even cash to stop the roller coaster ride?
2. What sounds more painful to you: The lower return you would receive by decreasing the volatility in your portfolio or the potential gain you may give up by moving to less volatile asset classes?

It sounds silly but question #2 can be really difficult to answer because no one knows what will happen tomorrow.  What disappointment can you handle more; the lesser gain or the nervousness of the ride? Most people don’t walk around bragging about the market return they sacrificed for a good night’s sleep.  But it’s important to be honest with yourself and set your plan on the path that is most comfortable to you…not anyone else.

Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.