The stock market hit new highs in July, spurred by the first interest rate cut in more than a decade, and buoyed by key economic markers; unemployment and inflation are low, and housing starts are steady. Yesterday, the market tumbled 800 points and had the worst day of the year.
What can we expect for the rest of 2019?
It would be easier to predict how many days of sunshine we’ll have in Indiana than to guess what the market will do next. The trade wars and tariffs make forecasting difficult, and the unknown factors that impact to the global economy (falling treasury yields, unstable financial markets, situation in Hong Kong, environmental issues, etc.) can drive speculation and fear.
The longer the market is up, the greater the chances are that it is going to come down. The adage “buy low, sell high” is easy to ignore when you see record profits. Emotionally, we want to believe that we will continue to make money forever, but true wisdom tells us that what goes up, must come down, as evident by yesterday’s news. We encourage clients to take off the rose-colored glasses and make certain that they preserve their gains, lock in market highs, and protect what they have worked so hard for all of their lives. Pre-retirees and retirees cannot afford a steep correction that could derail their retirement dreams. Unfortunately, many suffer from financial amnesia, forgetting what happened to their nest eggs back in 2001 and 2008. Isn’t it just common sense to have a portion of your retirement savings that is not at market risk? The market fluctuates up and down; the only things we control are the decisions we make.
Investor legend and author Howard Marks says,” The riskiest thing in the world is to believe there is no risk.” Investors are lulled into a false sense of security when things are going well; everyone wants to make money, and no one wants to miss an opportunity. Investors need to ask themselves, ” Does it make sense to have 100% of my retirement at risk in the market, or is it time to make some of my money safe?” If you realize it’s time to reduce your risk and secure your future – we are here to help.
