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Why a Disciplined Investment Approach Is More Important Than Ever

COVID-19 confirms our long-standing investment philosophy.

COVID-19 has triggered extreme volatility in the stock market. Huge daily declines on some days, followed by amazing rebounds on others, have left many investors wondering what they should do.

Not us. If anything, the market turmoil of the past several weeks has convinced us that our long-held investment philosophy and strategies are precisely the way to get investors through this crisis.

Our approach is based on these four pillars:

  • Own it all, all the time. This means continually maintaining a properly diversified portfolio — one that features 16 to 18 asset classes and market sectors, not just stocks.
  • Maintain a long-term focus. As we’ve seen, and as history has demonstrated for more than 100 years, market values can swing wildly in short periods (days, weeks, months or even a year or two) – but they have consistently risen over longer periods. Of course past performance does not guarantee future results.
  • Engage in strategic rebalancing. At any given time, some assets in a diversified portfolio will perform better than others – creating “drift” in the desired asset allocation of the overall portfolio. It’s easy to solve by rebalancing the portfolio. This restores the allocation back to its original, desired format.
  • Use low-cost, tax-efficient investments, such as exchange-traded funds and institutional-grade mutual funds so more of your money stays in your account, helping to increase your wealth.

Those who lack a carefully crafted plan like this often squirm, unsure if they are doing the right thing. No wonder some investors are panicking. But havinga solid, effective strategy, can help you sleep easier at night.

This view is neither unrealistic nor Pollyannaish. We’ve witnessed many major shocks to the economy during our 34 years as financial advisors. Events such as the one we’re in now follow a consistent pattern and they eventually run their course.

If you don’t have a comprehensive investment strategy and the headlines are making you ill at ease, talk with your financial advisor to discuss your feelings and get the guidance you need that’s best for you.

Talk with a Financial Advisor

No Cost. No Obligation.

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