Will AI destroy our jobs… Or unleash a new wave of prosperity?
Should we be panicked about employment numbers? Inflation? Interest rates? Trade wars?
If you follow the headlines, every day could bring something new to worry about. And often, those worries are reflected and amplified by market drops:
- On January 20th, the S&P 500 sunk 2.06% as tariff tiffs erupted again over Greenland.
- On February 5th, the S&P fell 1.23%, as investors went “risk-off” and Bitcoin fell below $70,000.
- And on February 12th, the S&P dropped another 1.57% during a tech selloff, in part due to new AI announcements.
But it’s worth noting that 2 of those 3 days were followed by the biggest gains of the year so far. On January 21st, the S&P rose 1.16%. And on February 6th, the S&P gained 1.97%.
And as of market close on February 24th, the S&P was up 0.65% for the year.
If you find yourself reading the headlines and wondering if you should be worried enough to adjust your portfolio, we have a couple tips you may find helpful.
1. Zoom Out
Instead of looking at today’s market moves, or this month’s, or this year’s, just keep zooming out.
Of course, past performance is no guarantee of future results. And we have no way of knowing what the future will hold.
But we believe in the market economy. We believe businesses will continue to innovate and succeed. And historically, through all kinds of ups and downs, the stock market has averaged about 10% per year returns.
Have the last few years been particularly good? Sure! Are we due for some below-trend years? Maybe — but we don’t know. Again, we don’t know what the future will hold.
But if we zoom out — and look at the market on the kind of timeline that matters for most of us — it suggests staying invested through ups and downs has been a good long-term choice.
And we believe that will continue to be the best course of action, regardless of what tomorrow’s headlines say.
2. Stick With The Plan
Our second suggestion is to stick with the investment plan you developed with your financial advisor.
- Should money you need for groceries next month be all-in on the next investment opportunity? Probably not!
- If you’re retiring and you want to make sure your money is going to last, should you convert it all to cash? We don’t think so!
Of course, none of this is a personalized suggestion — that’s why you sit down with your advisor, come up with a plan, and work with them to stay on track.
And when the market gets rough, that’s when it can be doubly important to go back to that plan. Because that plan is built on the understanding that the market doesn’t go up (or down) forever. That stock prices fluctuate. That the way you’re invested should take into account both short-term needs and long-term goals.
But even more important, that plan is developed based on helping thousands of families navigate their finances and investments. Knowing that in times of uncertainty, we’re humans and prone to make investing mistakes. And by following the plan, we have at least a reasonable shot of avoiding the common mistakes many less-disciplined investors make.
You’re always free to check in with your advisor, if you have questions. But rest assured, we are thinking about this every day. And we will let you know if or when we recommend making any updates to your investment plan.
This article was written for financial advisory clients of Asset Strategies. If you’re not yet a client and you’d like to speak with a financial advisor about how they could help you be more ready for retirement, request a Ready for Retirement Review here.
