Sticking to Our Financial Plan

by Nick Giacoumakis | Mar 27, 2020

We have been planning for this since we started working together. No one knew it would take the form of a viral pandemic, but we always knew something unexpected was likely to rattle the markets or stress test our client’s life plan. That is why we spent all that time together creating a financial plan, running “what-if” scenarios and talking through your concerns. One of our core investment tenets is to be resistant to panic and euphoria. With that being said, we want to re-emphasize that we are managing our model portfolio strategies very carefully and with close attention to detail. Our bias right now is to manage more to downside risk than for upside returns, however at the same time, still being very aware and on our toes to be able to adjust to maximize opportunity when presented.

Back to planning, while many of your everyday life activities are upended, keep in mind that your financial plan will provide clarity and reassurance. The plan we created addresses all aspects of your financial life, including your investment strategy. The aggressive market swings and overall uncertainty have no doubt created angst about how your investments might impact your financial plan.

During this tumultuous period, we’ve been carefully monitoring your investment portfolios and allocations, considering your risk tolerances and identifying opportunities to rebalance asset mixes, as warranted. Rebalancing is a normal course of action in investment planning. When markets shift, it is prudent to rebalance and shift your asset allocations with them.

No one knows when this market will bottom, much like no one knew in advance that the market bottom of the financial crisis would occur on March 9, 2009. The good news is that being able to call the market bottom will not dictate our success. Remember, sometimes hasty reactions to events can have an even greater adverse impact on your finances than the event itself.

Staying true to our plan will reduce the impact of emotions on short-term decision making. We’ve seen what panic selling looks like and we have never seen it generate positive results. In contrast, history has shown us time and again that investors who stick to their plans — despite how painful it may feel in the short term — participate in more market upside than those who abandon their plans and make rash decisions to exit the market.

The concept of timing the market is not compatible with a sustainable and rewarding strategy. The market is cycling as it has since the beginning of its recorded history. Time has proven that investors with a longer-term outlook are better served by strategic adjustments combined with identifying opportunities than outright exit strategies. The following chart highlights previous bear market downturns as well as recovery times.

Through the close of the markets on March 20, the S&P 500 is down approximately 30% from its record high close on February 19, 2020.

As always, the team at Neirg stands ready and willing to help you in anyways possible. We are working remotely in respect to the stay at home order and our business is operating very efficiently. If there is anything you would like to discuss or speak with anyone of our representatives, please don’t hesitate to call.

All material and information is intended for New England Investment & Retirement Group, Inc. business only. Any use or public dissemination outside firm business is prohibited. Information is obtained from a variety of sources which are believed, though not guaranteed, to be accurate. This presentation does not represent a specific investment recommendation. Please consult with your advisor, attorney and accountant, as appropriate, regarding specific advice. New England Investment & Retirement Group, Inc. and its employees do not provide legal advice, and do not provide tax advice outside of the advice given in relation to financial planning and asset management services.