Spoiler alert: It isn’t.
Sure, “The Market” is down. It has fallen way back to levels we haven’t seen in…6 months. Last summer, when “the market” first hit these levels, it was at an all-time high. These levels were wonderful. But now, because the prices had risen briefly higher in the interim, these same prices are scary.
Some of you, especially our newer clients, have become nervous in recent days. This year’s annual correction, which is by no means unusual, comes at a time when headlines are howling about “unprecedented” “uncertainty”. These are two of the favorite words used by headline writers as they are, at some level, irrefutable. At the most granular level, every event every day is “unprecedented”. At the very least, the names of the protagonists are likely to be different from any similar situation in the past. For years you have been subjected to article after article discussing “these uncertain times”. When I see or hear that I am always moved to ask, when were the certain times? Uncertainty is an ever-present feature of life.
As a refresher, let’s review your plan. First, you are not invested in “the market”. Reducing your well planned, well diversified allocation, and portfolio to “the market” is not a semantical difference. Your long-term money is in a portfolio containing upwards of one thousand of the world’s biggest and best companies. These companies are based all over the world and do business all over the world. They are selected for your portfolio by the several money management companies we work with to provide your predictable returns. Each of the companies in your portfolio is run by a corporate management team whose job it is to deliver returns by making the best use of the company’s capital.
Love him or hate him, THEY DON’T CARE WHO IS PRESIDENT. They don’t care who the US president is, nor do they care who is running any other country in the world. Their job is to understand any changes in policy as it relates to their company and to adjust to those policies.
Rogan & Associates clients reading this should start by understanding we’ve planned for this. All of this.
When we created your overall financial plan, driven by your goals for you and your loved ones, we allocated your money into buckets so that your money would be available to you when you needed it. Having provided clients with investment advice for nearly four decades, we understand that the “market” declines on average nearly 15% peak to trough every year and declines by nearly a third roughly every five years. Yet it also averages about 10% annual gains over the long term despite the declines. You can’t average a 10% return without volatility. It’s all part of your plan. (We also won’t try to time the dips in prices because we can’t. Nor can anyone else, we’re just more open about it!)
I can confidently predict that the value of your portfolio will either decline, stay the same, or rebound in the short term. It has been our experience, as it has been the experience of our clients, that declines like these are normal and temporary. And it has been our experience that the portfolio rises over time, the longer the time, the more dramatic the rise. I cannot guarantee this. I also cannot guarantee that the sun will set in the west tomorrow. But I’m planning on it occurring as always.
Presidents come and go. Recessions happen. Recoveries happen. We’ve planned for this.
Stop listening to “the news”. Seriously. Instead, let’s take a cruise. Or go buy some shoes. Get with your friends and schmooze. Take a snooze. Careful with the booze. Anything is better than “the news”!
