Good morning. The
U.S. stock market (S&P 500) has gone down about 5.4% since it's high in
late-September. I recommend we stay the
course with our long-term portfolios that use my asset allocation models. Those models blend our investments in ways
most suitable to our own risk tolerance.
If, for example, you're a moderately aggressive investor using the 80
Strategic IV portfolio model in your IRA, I recommend no changes to investments
in that account.
I believe this is an overdue pullback (5% off of highs) or an
occasional correction (10% off of highs).
I think this is an historically normal thing and not the start of a
crash or bear market, as those types of events are usually correlated with
(caused by?) economic recession, and our economy is generally pretty strong
right now.
Thoughts on asset allocation vs. market-timing… S&P 500 has
outperformed most other market indexes for longer than usual, and it is
reasonable to expect it to underperform for a while at some point. Market-timing
would mean we try to guess when to get out and get back in. Asset
allocation means we stay invested and diversified. The latter usually works out better over
time, and there is Nobel Prize-winning research supporting the asset allocation
concept.
I favor asset allocation and using one of my portfolio
models, for most clients. Please contact
me if you want to schedule time to review your accounts and strategy.
Thank you, and make it a great day!
--Gary
Potomac
Wealth Strategies, LLC
1800
Diagonal Road, Suite 600
Alexandria,
Virginia 22314
(703)
746-8195 phone
(855)
347-9483 fax
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