Hi everybody! The market is having hiccups and giving hiccups to investors. Negatives returns are showing, right now….exactly: right now. Everyone is looking at the S&P, because it is what gets reported, and it is doing fine! How come there are some negative returns?
Besides the market going down in its entirety, what is hurting portfolios right now is not the US markets but the international market! But if you are properly diversified, meaning owning stocks all around the world you should not fear. The question is: should we then leave the international markets and go entirely with the US market? If we do so, all we need to do is wait ( 15 days maybe? Or 2 months?) for the entire situation to reverse!! And because we went one sided, lose a bunch of money.
The wise thing to do is keep being diversified, own all the markets and, REBALANCE! That means sell all the high stuff you have and buy all the low stuff wholesale! Isn’t that what you hear all the time? Sell high, buy low. And if we went all to the US market wouldn’t we do exactly the contrary? Sell low and buy high?……….A word to the wise….the good old S&P….is it really the super stock and the cure it all the Wall Street bullies want us to believe it is?
Here is some statistics:
From 1970 to 2017 the S&P was #1 performing asset category only once. And for 5 years it was the worst. And it was last for 14 years.
Value stocks in emerging countries from 2000 to 2017 rose 610%.
Shouldn’t you then have S&P and International Value Stocks in your portfolio at the same time, diversify like crazy and rebalance? YES! In time a rebalanced portfolios will soar and get market returns and perform accordingly, based on the only thing we can control: RISK… So….keep calm, do not panic….diversify and rebalance! And this is what we do with our portfolios. Volatility is actually your friend. If your company does not rebalance quarterly, it is a problem. Ask how often they rebalance. If not, maybe you want to give me a call and find out what we do.
We invite you to come to our Mind Over Money seminar on October 30. Do not miss this event! If you have not signed up yet, please do so. RSVP with Rachel at 832-320-3311