Emotions are still running high following yesterday's election and Wall Street got hit with the one thing it dislikes more than anything: A surprise. Financial market trading last night implied potentially dramatic losses in the stock market today, but in the morning light, those losses have reversed into relatively modest gains. It's reasonable to assume that the coming days and weeks will see above-average market volatility as investors adjust to new expectations, but we are advising clients to sit tight and let it pass without making changes to your long-term investing strategy.
Several brief points as to why we think this is:
We've seen this before – U.S. stocks dropped 5% in the week following the 2012 election, only to resume a multi-year bull market shortly after. No one can predict what will happen this time around, but we do know that a gut / emotional response to get out of the market at that time was in error.
You're diversified – With very limited exceptions, our clients are invested in balanced strategies that have between 30% to 60% in fixed income. This is your portfolio's counterweight to stock market volatility, and we fully expect this portion to soften the volatility that stocks may exhibit.
We're all in this for the long-term – Our focus as your financial advisor is to implement a successful long-term financial plan. We vow not to make emotional short-term decisions that could impair this plan and we ask that you do the same.
We understand that this is a difficult time for some of you, and there may be a feeling that something has to be done. We're not here to tell you that your feelings are wrong, we just want to make sure that any changes to your financial situation are made in your best long-term interest. Please contact one of us if you'd like to review your financial situation and discuss any actions you are considering before making any changes.