The correction is coming, the correction is coming. Do I sound like Paul Revere announcing the
British? Well, yes, that’s my intention.
Now I could have written this piece six months or even two
years ago. I would be saying the same
thing:
o
Stay diversified
o
Have enough cash on hand to wait out 2 to 3
years of a down market
o
Buy low, or lower as the markets go down if you
have extra cash
o
Don’t pay too much attention to day-to-day
movements
o
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 Anna will attest, I was buying on
really bad days. It served me well.
Last year I cut back my asset allocation from 90/10 stocks
to bonds to a more realistic 60/40 given I have five years or a little bit less
until I plan to start spending some of that money after long years of saving
and investing. 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, computer, or fold up the newspaper and magazine
and throw them away. Six months later it
usually was 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.
o
Don’t get caught up in the day-to-day dramatic
news
o
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)
o
Reaffirm your life priorities, not just your
financial goals
o
Enjoy the rest of summer. It’s looking good.
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