How Strategic Positioning Helps You Make the Most of Turbulence
I know that this is a tough season for the stock market, and I just thought I'd offer a few seconds of perspective for you. We're talking about how your stock exposure works into your financial plan. Specifically, we're covering how we use stocks as a tool that can help mitigate the negative impacts on your long-term plan.
Keeping a 3-5 Year Horizon on Stocks in Your Plan
We're coming up on the holidays and everybody loves Black Friday sales. It's time to find a bargain for the things that we want to get for the people that we love over the holidays. But when it comes to stocks, we tend to feel differently – most people aren't exactly excited when prices are dropping.
We need to remember that in the long run, stocks go up, but in any given year, it's a crapshoot on where they're going to be. This year, we find all of the prognosticators who were forecasting the stock market to go up in 2022 were like pretty wrong. Rather than get into debates on that, let's instead focus on the personal impact and think about when you're going to need the money that's actually in these stocks.
Is it going to be next year? Probably not. Will it be a year after that, three years, or five years from that now? This is the way we build portfolios: your stock exposure is really money that we're going to need three to five years down the road.
Strong Positioning Leads to Opportunistic Investing
With that in perspective in mind, when everywhere else in the world goes on sale, we get ready to buy. I don't know about you, but when I walk into Walmart and toilet paper is 30% off, we tend to buy a little more. Yet, when the stock market goes down 20% or 30%, our bias is, "Sell! Get us out! Stop the bleeding!"
Yes, we're positioning pretty conservatively for our clients, but we have dry powder ready. We've got money in the bank to buy as things continue to deteriorate. We don't think we're at the bottom yet. We think stocks could go down further yet, but let's keep in perspective that when things go on sale everywhere else, the bias is to buy.
The stock market is the only place where things go on sale and our bias is to get out and sell. Be strong, be firm, be courageous, and anytime you need us, give us a call. We're always here with perspective for the decisions ahead.