Written by Brian Frederick, CFP®, CIMA®
Over the last 25+ years we have had a lot of challenges that some talking heads in the media classified as “it is different this time.” There have been many trying times for investors and 5 that quickly spring to my mind are: the Tech Wreck of 2000, 9/11, the Housing Bubble bursting, the Global Financial Crisis, and the Global Pandemic. At the time, they were very scary, and no one knew what to expect, how long they would last, or how long it would take to get back. Hindsight being 20/20, we could look back and see that it was not different after all, the market did come back, and for select intrepid investors it was a great buying opportunity.
Rarely in the heat of the moment are people thinking so rationally or opportunistically. In the thick of things no one knows what is going to happen. I certainly don’t and no one else does either. I find a certain amount of comfort and freedom in that it leads me to ask, “what to do?”
Firmly believe it may be simple, but it is not easy. I suggest:
Follow the plan. Being financial planners we have a plan for our clients that looks beyond just their needs of this week or even month, but for years. If things pop up and they always do we can adjust as needed. Planning helps determine how much short-term money vs. longer-term money should be invested. Don’t make short-term decisions with long-term money. Let others do that as that may create opportunity.
Follow the investment process. Ours is based on sound market theory and history and also passes the commonsense test.
- Things like spreading the money around so that we “do not have all our eggs in one basket.”
- “Buy low and sell high” is easier said than done. Rebalancing systematizes that and is regularly reviewed.
- Emotions can run hot or cold and turn quickly. Rarely do we make the best decisions in the heat of the moment. As details emerge, we adjust the portfolios to try and balance out risk and return. Patience can be one of an investor’s best attributes.
Warren Buffet says, “The stock market is a device for transferring money from the impatient to the patient.” Is this another buying opportunity? Who knows? Only time will tell, but a well laid plan helps guide the way.
Mainspring Wealth Advisors works with our clients to create a solid investment plan that are based on your specific situation, goals, needs, and wants. Sometimes having the patience and the confidence to follow the plan is very hard and I encourage you to revisit yours with your financial advisor.
Please reach out with any questions. We are here to listen, learn, talk, and act.
Sincerely,
Brian Frederick, CFP®, CIMA®
Chief Investment Officer
Mainspring Wealth Advisors
Any opinions are those of Brian Frederick and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
