It has been a while since the markets have had a meaningful correction. Over the last 3 years the only meaningful pull back was last fall when the S&P 500 dropped from 2.011 to 1,862; a little over 7% decline.
Most Money Managers would welcome a nice pull back so they could invest a few more dollars into their most favorite companies. They would love to pick up a bargain. As volatility returns to the market; as it most certainly will, there are 7 things investors should remember:
1) Stick with your long-term plan (Short-term market fluctuations should not be a concern when you have a sound financial plan.
2) Look beyond today’s markets (No one can predict what the market will do or when, so think of it as a store-prices increase when demand is high and drops when demand is low. The long-term trend is upward).
3) Don’t let media headlines distract you from your plan (The media focuses on “Now” and not the long-term).
4) Avoid chasing the latest trends (Jumping from one investment to another can hurt your long-term performance).
5) Accredited professionals are the best managers (Your portfolio is diversified among a number of investments, and managed by highly qualified portfolio managers).
6) If your objectives have not changed, neither should your investments (The investments in your portfolio were chosen because they were compatible with your long-term goals).
7) Volatility is the friend of the long-term investor (Market will offer up great bargains from time to time allowing a portfolio manager to add to some of his best investment to create a great long-term return).
So, again as volatility returns, remember your goals, and don’t let short-term events cause you to disrupt your long-term plans.
Paul Fisher – CFP