• Brent D Dickerson CFP® EA

Downturn

Well, so far 2016 is starting out as a pretty terrible year on Wall Street. Since the start to the year, the Russell 3000 Index is down about 8.5%. I like to use the Russell 3000 because it is a broad market index which I feel captures the true sense of the economy much more so than the S&P 500 or Dow Jones Industrial Average which only track the largest companies in our economy. The Russell 3000 tracks 3,000 stocks ranging from large to small companies and includes growth and value stocks. So with 8.5% of the value of our economy being erased, think of that as eight-and-a-half cents for every dollar. That means that the value of our economy may have lost over $1 trillion just since January 1.


I implore you not to be concerned however, well, you can be concerned but don’t let your emotions get the better of you. Most mom-and-pop investors (those without a qualified financial advisor) will take this as a sign of an impending bear market and will be compelled to sell everything and go to cash. While that is a strategy, its not a very good one and research overwhelmingly proves it. If you were a wealth management client of RBS – the Royal Bank of Scotland, I’d be concerned because that is there strategy and they advised their clients to go to cash recently. Today, they may look like geniuses, but it’s a fluke and over the long term their attempts at “timing” the market are foolish. Don’t you think that if they could accurately time the market they would basically own the entire world because they would be the only ones able to do it and everyone would have their money invested with them? Timing only works when you’re lucky, and no one is lucky all the time. For most investors this downturn, or bear market, or correction, or whatever it is will be a blip on the radar that will fade into history like all the other blips. If you are a long-term investor stay in the market, heck you may even want to buy now! As the old saying goes, buy low and sell high. So if investing was appealing to you a month ago when the Dow was nearing 18,000 it should look a whole lot better to you today when it sits at just under 16,000 – I call that a sale, and who doesn’t like a sale? It’s certainly not my wife.


So, don’t feel bad if your investments are taking a dive this month. These are the times that test investor’s mettle and if you can’t stand it and think you have to exit the market; well, you are making a mistake and these are the times that you should contact a financial advisor – like me!


Photo by rawpixel on Unsplash

If you are ready to see how this downturn can help you to have a better financial future, then you need to contact me. We can chat about all the ways that investing smartly can help you to fulfill your dreams and goals for your future and your family’s future. Learn more by visiting my website, and then contact me as soon as possible so we can get a conversation started on how you and I can start planning for a better tomorrow.

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