I am sure by now you have heard about the current market volatility. There’s some things I’d like to share to put your mind at ease. First off, the market has had an incredible run since its last setback in 2007-2008. In recent months it had beat most industry experts predictions and defied gravity even with some fundamental issues floating around globally like the US financial stoppage, North Korea and US friction and creeping inflation with slight increases in interest base rates.
What I am saying is this isn’t a huge surprise, we’ve been due for a correction. Generally even in an up market there are peaks and valleys en route to the final high point. Attached is a link to a video from IPC’s Rana Chauhan that I feel gives some great perspective on recent events. Many of you may have had the opportunity to meet Rana at some of our client events the past few years.
Most of Tanner Financials clients investments are held in portfolios that have diversified investments. In addition, we have systemize rebalancing automatically to your ideal portfolio based on your risk tolerance. What this means is we’ve automated buying low and selling high. In a down market or correction, the equity percentage determined by your risk, reduces in value. Your portfolio then will ultimately buy more equities to rebalance to the percentage of equity we have identified you should be holding. This means in a down market we’ve automated taking advantage of these adjustments for the long haul.
When the market ultimately returns to form, your equity component units will go back up in value and now you have more of them. As they become worth more and your equity percentage grows above your ideal amount, your portfolio will automatically again rebalance and sell back to your ideal level. So, while market swoons are stressful to everyone involved (Including us), they are really an opportunity to enhance your returns more than a flat line upwards would.
Should you have any questions about things, don’t hesitate to contact us.