Quarterly Statements and Market Volatility

By October 26, 2018The Friday Brief

*An impressive collection of mailings generated for one Charles Schwab account in one day!

Lofty expectations for corporate earnings have combined with rising interest rates and increased global trade tensions to bring volatility back to the stock market after a long hiatus.  It would appear that daily, multiple percentage point swings in stock prices may be the norm, at least for a while.

While it’s perfectly normal, expected and even healthy for the market to behave this way, it’s never comfortable to watch your nest egg gyrate with the daily fluctuations in the market.  The financial media doesn’t help with their attention-grabbing headlines.  So what should you do if the current level of stock market uncertainty has left you feeling a little uneasy?

Here are several helpful action steps…

  1. Revisit your risk tolerance.  If it’s been a while since you’ve measured your tolerance for stock market volatility, now would be a good time to do so.  Here’s a handy tool we like to use called Riskalyze.  Take a few minutes to take this quiz and we’ll email you the results. Click here.
  2. Review how your portfolio is invested.  Ensure that you have the right kinds of investments and in correct proportion.  Unfortunately that’s sometimes easier said than done.  Maybe you have accounts scattered around at several different financial institutions.  Heck, even if you’ve consolidated all of your accounts in one place it can still be a daunting task to get a picture of how your portfolio is invested and how it has performed – let’s just say that the financial industry’s current versions of account statements and online offerings leave something to be desired.*  That’s one of the reasons we create a simple yet informative quarterly statement for our clients.  Beacon clients, your Quarterly Portfolio Review will be posted to your Beacon Portal today.
  3. Rebalance your portfolio – Considering the run-up the stock market has experienced over the last several years, there’s a good chance that stocks make up a larger percentage of your portfolio than you intended. Selling some of your stocks to bring your portfolio back to its intended allocation will ensure that you’re not exposing yourself to more risk than is necessary.
  4. Make a plan to put cash to work – Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.”  If you have a chunk of cash you’ve been waiting to invest perhaps now would be a good time to consider doing so.  If this seems daunting to you, it might make it easier to stomach if you systematically stage your cash into the market over a period of time.   For the record, this is not investment advice.  Please consult with your financial advisor before undertaking such a plan.
  5. Turn off the financial media – Some of the best advice during times of stock market uncertainty can be to turn off CNBC and ignore the financial section of your newspaper for a while. Still, even with the TV turned off and the newspaper in the recycling bin, it’s nearly impossible not to hear bits and pieces of news about the volatility in the stock market. Kind of like when you’ve recorded last night’s game to watch tonight and you’re walking around town covering your ears and making loud noises anytime someone even comes close to mentioning the score.
  6. Remember that your portfolio is not the stock market – When we hear that the market is experiencing a period of volatility our emotions can cause us to feel as if our own investment experience is synonymous with that of the stock market in general. Just remember that in order to experience those same results, your portfolio would need to consist solely of stocks.  I can count on one hand the number of people I know that only own stocks.  If you’ve done the work ahead of time to remove the unnecessary risk from your portfolio, your experience might be more similar to that of a 60/40 balanced portfolio, which shouldn’t be nearly as volatile as a portfolio that only owns stocks. Why doesn’t the financial media report the day’s trading results based on a balanced portfolio?  The information would be more appropriate for the average investor, and we wouldn’t have to cover our ears when someone mentions the stock market at tonight’s neighborhood cookout!
  7. Check in with your Beacon financial advisor – We’d be happy to walk you through steps 1- 6.

Have a great weekend!


Author Geoff Hall

After 23 years of practicing wealth management, multiple bull and bear markets, an internet bubble, a financial crisis and everything else in between, I have come to understand certain truths. The stock market can be volatile and it’s best if you prepare ahead of time. The less you pay in taxes and expenses the more of your money you keep. Outside perspective is a very good thing. Having a good financial plan as your frame of reference goes a long way. Based on these truths, my value proposition is elegantly simple yet profoundly effective… I strive to listen to my clients like they are the only person in the world so that I can best understand what is most important to them. I work diligently to control the things that can be controlled in the investment process like taxes, expenses and market underperformance so my clients can keep more of their hard earned wealth. By creating and continuously monitoring a plan for each of my clients I ensure that they feel confident that they are on track to do more of the things that are most important to them. I offer my clients independent, unbiased advice in a language that they understand. My wife, Crystal, and I have a five year old son, Cooper, and a three year old daughter named Rhodes. When I’m not spending time with them you might find me downtown serving at our church, pushing my limits at an F3 workout or having coffee with a friend in the Five Points area. I have been given the privilege of shepherding my family of clients through the ups and down of the markets and of life for that matter. And for that I am thankful.

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