First They Go Up, then They Go Down!Submitted by Karp Financial Strategies on September 4th, 2015
by Jeffrey R. Karp, CLU, ChFC, CASL®
The stock market will go up and down, over time. I wanted to state the obvious as it seems that over the past few years many people have forgotten this basic tenet of investing. In fairness, and statistically, the markets performance has added to the irrational expectation of up only. This past week has brought reality back into focus.
I see no need to rehash the events of the past week, as there has been no shortage of media coverage (just search “recent market performance”). You can read all of the theories on the cause of the drop, as well as the future direction of the economy, stock markets and just about any other topic that can be debated.
We, at Karp Financial Strategies, emailed LPL Financial’s recent position paper to our clients (if you want a copy please email us and we will be happy to forward it to you), but wanted to add a follow-up to that information with our bottom line.
There are many dynamic factors affecting the global markets all the time, and when any, or a combination of them cause a reaction (positive or negative), it may not always be predictable. Technicians use trends or charts to predict the future direction of the markets, but neither these nor other tools are 100% accurate. Watch any end of day financial program, and you will find experts making opposite conclusions on the same set of facts. The real question for the experts is simply, “Where were you this morning, so I could be ready for what just happen?”
The truth is, they don’t know for sure either. This means that the best plan, as an investor, may be to make a reasonable allocation across a variety of sectors, in line with a set of goals, to be used as a basis for a sound investment strategy. We like this strategy better. More importantly, managing the emotions of a volatile stock market and having established goals helps keep a clear focus. Ask yourself two questions:
- Does the recent drop in the market affect your daily life, today?
- How do you plan to enjoy today, if you have not developed a plan to make you comfortable about tomorrow?
At Karp Financial Strategies, we are focused on helping our clients plan for tomorrow so that they can maximize today. Fact – your today is made up of 86,400 seconds. Use them or lose them, as there is no carryover. Make sure your financial plan can weather the ups and downs of the stock market so you can enjoy today!
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Asset allocation does not ensure a profit or protect against loss.
Securities and Advisory Services provided through LPL Financial, a Registered Investment Advisor, Member FINRA, SIPC.