As we enter the New Year, after a spectacular run last year and the year before, the inevitable “can it continue” conversation comes up.
Of course it can continue, but then it would break with some serious tried-and-true patterns. That is not to say a continued bull market is likely to happen, just that history informs us of the probability that it will not.
So do you sell everything and hide? Certainly not. This is where the true financial planner‘s value shows up.
If your planning included a diversified portfolio, respectful of your risk tolerance (the ability to sleep at night and still have some part at “risk”), and a conversation of the potential for loss as well as the potential for gain, then you should be able to handle a downturn in the market without destroying your financial plan. It is best to stay the course.
If, on the other hand, your “advisor” recommended a portfolio which you are not comfortable with, a portfolio you do not understand, or one that assumes way too much risk for your situation, then you should be concerned if the market takes a hit. Time for a review.
Now might be a great time to sit down with your advisor and discuss the probability of loss in your portfolio and make sure it is something you can live (or sleep) with.
For us, the financial plan comes first, the asset management second. It only makes sense that we know what type of portfolio you need in order to achieve your stated goals. Anything more than that would be a bonus. Bonuses are good.