The global financial markets remain very, very volatile during 2016. There is a lot of “bad” news out there and new risks appear to be coming out of the woodwork! Growth is only marginally accelerating. China’s growth is only creeping along at maybe a 6ish% growth rate and their stocks are in a selling-off period. Oil is setting new lows – again. Geopolitical risks are increasing. Bears are everywhere.
“Lions and tigers and bears, Oh My!”
Investor sentiment is deteriorating. However, what makes it even worse for the psychology of an investor is that there seems to be an absence of any good news. Or is it just how we listen? For example, when you’ve filled your gas tank up lately, did you notice that you had a little bit more cash in your wallet? Did you invest it or buy a lottery ticket?
The message here is that the best investors over time have similar philosophies: They generally don’t sell and in fact often buy during times like this. They recognize that many declines are only temporary and they use volatility to buy. Warren Buffett is quoted as saying that, “periodic volatility is defeated by the march of time.”
So rather than thinking about selling, we encourage our clients to maintain a globally diversified portfolio and use these types of opportunities to focus on Strategic and Tactical allocations within their risk profiles.
“Don’t worry Aunt Em and Uncle Henry—we’ll be okay!”