“What to do when things get choppy”

“Rock the boat, don’t rock the boat baby”- The Hues Corporation

When sailing from one destination to another there will be times when unfavorable weather will arise. Think of taking a cruise on the Atlantic Ocean, or even a boat ride through Lake Erie. An image that may come to mind is an evening cruise where the water was so still that the vessel seamlessly sailed through the night. Another image that may come to mind is one that I have in particular: on a channel off the coast of Ireland, where the ferry that I was on got caught in a storm. The captain of our ship calmly turned on the intercom to assure all passengers that although this current patch of our journey was a bit choppy, we were still full steam ahead towards our destination.

Recently, the “hot item” in the news has been the Coronavirus. It is natural for some individuals to see the market step back a bit and think “Is it time to buy low?” or “Is it time to sell out?” However, this is a good time to see the market step back and think “How does this impact my goals?”

When a market steps back it is a time to reflect:

-Why are we invested?

-When do we need this money?

-How is our investment objective lined up with our time horizon?

-How accessible are our funds?

-To what purpose does each account have? What is our “Why”?

-Are we properly diversified?

-What are our goals? Short term and long term

Once you have reflected on these items, if no changes are necessary to keep you on track, then do not make any. If you do need to make changes, then trust your team around you as your sounding board.

It’s hard to find positives when the S&P 500 declined the prior week when the market is volatile. We have had multiple recessions in the past 30 years and have always moved on to better days.  This one will be no different.  As the pandemic subsides, confidence will increase and individuals, with pent up demand, will begin spending again.  Depending on the stimulus packages provided we will get a quick V-shaped bounce, a longer U-shaped rebound, or a slower L-shaped rebound.  Hopefully not the latter.

“We have some notable stats that are quite bullish for returns going forward: Recently the “back-to-back” losses of at least 3% for the S&P 500 was the 10th such occurrence since 1950.  In the 9 previous times this happened, the S&P 500 was “up” 1-year later each time, gaining between +6.2% to +45.0%, with all 9 gains averaging a +22.8% gain (source: BTN Research/ MFS March 2nd Publication).

Just as it will rain in the spring and the fall in the Midwest, there will be times when it rains a bit on our portfolio.

Just as the weather that the ferry encountered across the Irish channel did not deter it from moving full speed ahead to its destination, a dash of weather along your journey shall not deter your boat from its full steam ahead journey towards your destination, for there will be days when the water may be a bit choppy and with some rain, but there will be plenty more days when the sun is shining and we are full speed ahead towards our destination.

This is a new day in a new week, and it is a great time to review your goals for:
-Today
-This Week
-This Month
-This Year
-The Next 5-10 Years+

Goal planning is broken down into steps. Do not let the rain today distract you from the sunshine in your future….

So do you have the notion… to review your goals?

 

Written by:  Justin Hamlin, CFP®

 

These are the opinions of Justin Hamlin and not necessarily those of Cambridge, are for information purposes only, and should not be construed or acted upon as individualized investment advice.  Investing involves risk.  Depending on the types of investments, there may be varying degrees of risk.  Investors should be prepared to bear loss, including total loss of principal.  The strategies discussed herein are not designed based on the individual needs of any one specific client or investor.  In other words, it is not a customized strategy designed on the specific financial circumstances of the client.  However, prior to opening an account, Cambridge will consult with you to determine if your financial objectives are appropriate for investing in the model.  You are also provided the opportunity to place reasonable restrictions on the securities held in your account.