Broker Check

What to Do When the Dow Drops 500 or 1000 Points in a Single Day?

| October 05, 2018

Absolutely Nothing .....It’s Too Late.

The time to manage risk is way before the market destroys your nest egg or retirement funds. Despite all the educational information and access to advice, most investors allow fear generated by highly volatile markets, the media, and economic changes to dictate their investment decision-making. Algorithmic trading causes much of the volatility when highly sophisticated computer programs managed by professional traders respond to momentum across multiple markets by instantaneously buying or selling specific categories of stocks and bonds. As an individual investor,you cannot complete with these traders who have billions of assets at their disposal.

If you are a long-term investor building your assets for retirement, you need to think about investing differently than does a short term speculative investor. You need to be invested in a diversified portfolio within your risk tolerance that is actively managed. The days of buy-and-hold investing are long gone.

Of utmost importance, you need to work with a financial advisor who helps you establish your investment strategy. The right advisor will gather information relating to your personal circumstances and long-term goals. He or she will then use a risk-tolerance questionnaire to establish what kind of investor you are to make sure you are placed in the right investment portfolios. I use the SAM Profiler (Strategic Asset Management Profiler), a universally used questionnaire developed in 1992 by Sierra Investment Advisors. These results are in turn matched with a Portfolio Strategy Selector tool. Used together, they produce a personalized,comprehensive bundle that builds a foundation for achieving goals within your timelines. These tools help identify the securities, sectors, and asset class selections that will best serve your investment goals through changing economic and market cycles.

When your investments are set up according to your long-term goals and proper risk tolerance, you will no longer react to or worry about short-term market volatility and noise in the media.

Call or email me for a complimentary consultation to review your investment strategy and risk tolerance to make sure they are proper for you at 562-879-9743 or