Today, on March 11, 2020, you might have heard that the Dow Jones Industrial Average, made up of the common stock of thirty of the largest capitalization companies in the world, ended its eleven-year bull market and entered a bear market. Very scary! (especially if you read the news flowing through your devices) – But what does it mean for a long-term investor?
A bull market is an environment of positivity where stock prices generally rise as economic activity and corporate earnings increase. Conversely, a bear market is defined by falling stock prices, depressed economic activity, and a pessimistic attitude by investors.
As we enter the most recent bear market, what should you do? The answer should be defined by your long-term financial plan. Many planners and investment professionals view financial planning and investment management as separate services, but we at SevenBridge know that they are intimately connected. Without a defined risk tolerance, horizon, and overall investment objective that is determined based on your short and long-term goals, no advisor can be confident in their investment recommendations and ongoing management strategy. This is the reason we meet with our clients and prioritize financial goals to determine the optimal asset allocation to meet those objectives.
Market downturns are inevitable and are not easy for advisors or clients, but remember, we have been through this before and in the wise words of infamous investor Warren Buffett, “after all, you only find out who is swimming naked…after the tide goes out.” Give us a call to talk about your financial plan and asset allocation – are they dialed in to help you meet your goals?