The Correction is Coming
The correction is coming, the correction is coming. Do I sound like Paul Revere announcing the British?
Well, yes, that’s my intention. I wrote a similar missive six years ago.
I’m still saying the same thing:
– Stay diversified
– Have enough cash on hand to wait out 2 to 3 years of a down market
– Buy low, or lower as the markets go down if you have extra cash
– Don’t pay too much attention to day-to-day movements
– Look to rebalance two to four times a year. The calendar is not sacred, but percentages should be.
I have often remembered and repeated Warren Buffet’s advice: “Be fearful when others are greedy, and be greedy when others are fearful.”The last big downturn 2008-to early 2009 gave me the opportunity to put this strategy into action. My partner, now boss, Anna will attest, I was buying on really bad days. It served me well.
In 2013 I cut back my asset allocation from 90/10 stocks to bonds to a more realistic 60/40 and seven years later my allocation is 50/50. I also have about two years of cash on hand for down market investing or spending without touching investment monies. It’s all drama. That’s my summary of day-to-day financial news. The bolder or more dramatic the headline, or the scrolling BREAKING NEWS tag running across the screen, the more I want to turn off the TV, Twitter, Facebook, the computer, or fold up the newspaper and magazine and throw them away.
Six months to a year later it is usually no big deal. So why this post? I want my family, friends, clients, prospects and other allied advisors to be prepared. You’re the reason I’m doing this.
– Don’t get caught up in the day-to-day dramatic news.
– Get out that checklist on an annual basis to cover all your bases (If you don’t know what they are, or don’t have a checklist, email me)
– Reaffirm your life priorities, not just your financial goals
– Enjoy your family and friends. It’s never too late to stay in touch if its 6 feet or more.
This article originally appeared in my blog, AdviceOnlyMusings in August 2014
