Not Yet Stress

September 9, 2020 - Published by IAG Wealth Partners

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Let’s say on February 18 you had a premonition. A really strong premonition.

You saw the COVID-19 outbreak surging in Italy and thought that it would soon be arriving in the United States. You correctly diagnosed the negative impact on the American people, our economy, and the financial markets.

Your every instinct tells you to call your financial advisor and direct that your portfolio be moved to cash. After some thought you choose not to call and, as events unfold over the next month, you feel some serious regret as the financial markets melt down.

If only you had made that call. You could have been sitting in cash instead of seeing your account value decline for a month. But what would have really happened if you had made that call?

Your instinctual correct timing on when to go to cash would have required an additional correct timing on reinvesting your cash to be truly successful.

Would you have reinvested before March 23? Highly unlikely. You would have felt much safer to stay in cash. Your instincts would have told you “not yet.”

Would you have moved out of cash after the market had gone up 15% in three days? Unlikely. You would have thought the markets bounced back too far too fast and were due for a pullback. Not yet . . .

Would you have moved out of cash after the market had gone up 30% by late April? But the headlines were still horrific and the microscopic menace was spreading rapidly. Not yet . . .

Would you have moved out of cash to “buy the dip” after the market went down 7% in early June? But what if that downtrend accelerated? Not yet . . .

Would you have moved out of cash when the market unexpectedly reached new record highs? Not yet . . .

Instead of creating all of this “not yet” stress in your life, you wisely chose to maintain the portfolio that we specifically designed for your long-term financial plan. While it was not instinctual, it only required one decision to be considered successful (not two).

When your head or gut is telling you that a market decline is imminent, you have the choice to be filled with confidence or stress:

Confidence. You choose to remain committed to your long-term investment plan knowing that your financial plan and your portfolio are designed to work together through all market conditions. You are confident that your portfolio is designed using Portfolio SegmentationTM which keeps the money you will need in the next few years in lower risk investments while only using riskier investments for long-term goals.

Stress. You choose to act on your impulses and – even if you are absolutely correct – potentially ruin your financial plan by moving your long-term investments into lower risk investments. You then put yourself under pressure to accurately navigate daily “not yets” to correctly time when you will return to your financial plan’s investment portfolio. While it may feel good initially if the market actually declines, you are choosing to create unnecessary future “not yet” stress.

We know that 2020 has challenged even the most disciplined investors to stick with their investment plan, and we are thankful for all of our clients who have diligently followed and benefited from our advice.

Unfortunately, we expect additional economic, political, and market challenges in the coming months that will fill you with conflicting instincts. When those instincts arise be confident that we have designed your portfolio for your personal goals in advance so that you can avoid adding “not yet” stress to your life.


Quote of the week: Peter Lynch: “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves.”

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.

Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

This Photo by Unknown Author is licensed under CC BY

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