5 Key Investment Principles for Consider
- Investing is not the same a speculating - Be careful not to let current events dictate long-term investment decisions. We believe that successful investing essentially focuses on your goals and is guided by your financial plan, while failed investing is focused on current events and market movement.
- Investor behavior vs. investment performance – Studies show that investment success often has much more to do with investor behavior than it does the actual performance of the investments you may own from time to time. Imagine what happened to the investor that chose to liquidate his equity portfolio towards the end of March to “sit on the sidelines,” waiting for things to “calm down” and for the future to be a little more “certain.” They would have locked in their losses and not participated in one of the best quarters in market history and by the way, are we any more certain about things today than we were in March?
- Time vs. timing - We continue to believe the only way to capture equities’ long-term return potential is to “hang in there” during periods of volatility. This has never been more evident than in the last 2 quarters.
- Volatility comes with equity investing – We believe volatility is likely to continue as our economy continues to try to reopen, we are likely to experience 2 steps forward and 1 step back. Even if there is meaningful progress in fighting the virus there is a presidential election and civil unrest that will likely contribute to volatility.
- Sometimes “doing nothing” is the best “something” you can do. Consider whether your lifetime investment goals have meaningfully changed since January 1. If not, and if you portfolio allocations are consistent with your financial plan needs, we see no compelling reason to change your plan and certainly no reason to make big changes to your portfolio.
If you would like to visit with us to see how we can assist you in designing, implementing and monitoring a financial plan for you please contact us and we will be happy to set up a time to talk.
“ The only function of economic forecasting is to make astrology look respectable.” - John Kenneth Galbraith.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. The information presented does not constitute a solicitation for the purchase or sale of any security and is not a recommendation of any kind. Please consult your financial advisor before making financial decisions. Investing involves risk including the potential for loss. Past performance is not indicative of future results. (07/20)