The start to 2016 has been marked by uncertainty in a number of areas. China, ISIS, Oil, etc. Not surprisingly, this uncertainty has caused plenty of fear and, consequently, volatility in global stock markets. Also not surprising are the familiar echoes from the “talking heads” on television and even some investors to “Get out!” or do something. Of course, there is no one-size-fits-all approach to investing or risk management. Every family’s situation is unique and calls for an equally unique approach. Indeed, with the typically short-term nature of these downturns, some investors likely ought to be buying, not selling.
So what does a person do when markets are volatile? Well one of the worst things a person could do is react emotionally and make a rash decision. Pause and ask yourself two questions: 1.) What is your investing time frame? 2.) How is your portfolio invested? If you’re 10 or more years from retirement and your portfolios are invested aggressively, that’s probably ok. Short-term volatility should not change a long-term investment strategy.
What if you’re closer to retirement or already retired? If you’re within 10 years of retiring, you probably should be lowering the risk in your portfolio already. Meaning moving some of your aggressive investments (often stock), toward less aggressive investments (often bonds). If that’s you, depending on your tolerance for risk, that probably means you have 50% - 75% of your total investments in stock. Because most people still need their investments to grow in retirement, that same logic applies; although the total percentage of stock may be in the slightly lower 40% -65% range. At Macco Financial Group, this is one of our guiding principles. And we work very hard to position our clients' portfolios for volatility so as not to expose them to excessive risk.
Finally, we recently hosted a conference call with Nicholas Lacy, Raymond James Asset Management Services’ (AMS) Chief Portfolio Strategist. Nick is greatly respected in the industry and shared some tremendous insight on AMS’ views of global markets, volatility, growth expectations and what they have done and are doing to position portfolios for the future. If you’d like to hear a replay of that call, it is embedded below. We will be proactively contacting clients. And we invite you or anyone else concerned about the markets to call our office at 888-617-6830.
Michael J. Macco
President, Macco Financial Group
Investment Management Consultant
"Any opinions are those of Michael Macco and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Past performance may not be indicative of future results."