Investors are enjoying the longest bull market ever, but two camps of thought still exist. One camp points to the fact that, based on historical numbers like price earnings, equities are highly overvalued and overpriced. The other camp insists that we are still in a “TINA” market, meaning, There Is No Alternative to stocks. This group feels that until rates rise significantly, this will remain true, and that means there could be significant upside in the current market. Equities are not cheap and even the savviest investor needs to have a watchful eye on risk. Short-term interest rates and cash equivalent yields are still historically low.
Volatility increased in the third quarter, and this will probably continue into the fall. Interest rates are in the spotlight as the Fed cut rates twice in the third quarter and more may be coming. Consumer confidence remains strong, but the Trade War and tariffs between China and the U.S. bring market anxieties. U.S. and global political uncertainty remain a key item to watch.
As investors, it is helpful to remember strategies to consider during volatile times. These include revisiting your financial goals and objectives to ensure your investment allocations match your risk tolerance. If possible, add money to your investments regularly and try to increase your contributions during downfalls. It’s nearly impossible to accurately time the market (sell when you think the market is at its peak). Accept that volatility is inherent to investing. Consider avoiding or ignoring daily financial news. Lastly, try not to make any emotional decisions.
Remember the words of legendary investor Jack Bogle: “Stay the course, no matter what happens, stick to your program. I’ve said ‘stay the course’ a thousand times and I meant it every time. It is the most important single piece of investment wisdom I can give to you.”
A financial plan is only as good as your ability to consistently follow it.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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