How Bad Is It Really?
Is this a Bear market or a pullback in a continuing Bull market? With historically low oil prices, concerns over China, the Middle East, the Feds raising rates and so on, is this a bad time to be in the market? Who knows….
There has always been some type of bad news and you can click here to see charts showing the S&P 500, DOW and NASDAQ from 1/1/2000 through 2/8/2016. In the last 15 years we have had 2 downward market moves in the negative 50% range and yet the 3 major indices have still gained an overall 8.7% to 58% during that time. You can see how the current downturn ranks in comparison.
What can you do while you wait for the market to recover?
First; make no dramatic moves. Selling low and getting back in (buying) when the market is higher has cost investors lots of money in the past.
Second; try to limit your spending to 4-5% of your income producing assets. Only liquidate enough to live on.
Third; if available to you, consider a low interest (likely deductible) home equity loan to pay expenses while you wait for the market to recover and pay it back when it eventually does.
Fourth; limit your exposure to the media, especially the sensationalists who feed on your fears. I only watch CNBC every morning while I read the Wall Street Journal. Starting at 6am, the CNBC commentators provide factual, unbiased information and consistently have live interviews with the movers and shakers of the financial world – from all viewpoints – so you can get a balanced picture from the people who are dealing with the current economic reality.
Finally; call, email or come in to see me and we can review your situation to see if your portfolio is positioned properly.
I hope this helps and would love to hear from you about your thoughts, concerns or questions.
Marc R. Gillespie, CLU, ChFC, CFS, MSM, CLF