We acknowledge the recent market sell-off has been a bit unsettling. While OneSource Retirement Advisors remains vigilant to monitor for new developments, we do not view making any changes in the portfolios at this time. In this regard, we want to highlight a few important issues:
There is no free lunch
The reason we expect higher long term returns on stocks, rather than on cash or bonds, is that stocks have higher volatility. There is no free lunch in the financial markets and there are times when we need to accept higher volatility when stocks decline in order to receive higher long term returns as stocks go higher.
Market timing does not work
Market timing is like the yet to be found Holy Grail of investing. If an investor could profit consistently, the rewards would be great, but investors typically end up with sub-par performance because of the extreme difficulty of getting the timing right.
Since 1990, there have been 35 declines of 10% or more in the S&P500. Of those 35 corrections, the stock market has fully recovered its value after an average of 10 months. There is no guarantee the length of recovery will be 10 months this time. But we believe a crystal ball is not necessary for successful investing, rather the discipline to stay invested for the long run
The most important lesson during the Great Recession of 2008 is diversification works. A mix of assets provides a smoother ride and more importantly – gives you income for withdrawals when you need cash. As an example, while stocks have performed poorly over the past few weeks, your bonds and your real estate have provided positive returns. This time frame is rather short, but it is a testament to asset allocation.
We are here for you
As your financial fiduciary, we care deeply about your financial health and peace of mind. It is times like this that is important to remain calm. Chicago Bears head coach Mike Ditka once opined, “Nobody wins the Super Bowl in October.” Sometimes markets have a poor run; but there is a lot of time left in the game for stocks to bounce back and to grow. In the meantime, OneSource Retirement Advisors will monitor your portfolio for opportunities that may add value to your portfolio.
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