Late Friday,  we got an email from a client who remarked, "My wife and I are cringing. Were you able to get us into the money market before this debacle?" 

In other words, do the opposite of the picture above.  Our plan has us buying stocks when fear causes prices to be low and we sell stocks when prices are high. 

This time last year clients were asking "why are you selling stocks and buying bonds when everyone knows interest rates are going to go up and stocks are at all time highs?"  The answer was "We are preparing for the uncertainties that will cause stock prices to retreat in price."  In other words, a year ago we were preparing for what happened last week so there was no need to do anything last week.  The plan was already in place to deal with the inevitable.

How do we know when to take action in your portfolio? Each client has an specific Target Asset Allocation tuned to their financial goals.  When that allocation gets out of balance with the targets due to dramatic events in the financial markets,  we act to rebalance the portfolio.  We sell something that went up in value and buy something that is "on sale."  The beauty of this model is we do not need to guess about when to act.  

Fear is a normal response.  You may be fearful that your money runs out before you do.  We can easily answer that question for you by comparing the value of your portfolio to the goals in your financial plan. August and September are the most volatile months for the stock market so this roller coaster ride may continue. Knowledge is the antidote. Do not let the financial markets cost you sleep. Contact us.