Many times investors feel that they know what is going to happen next in the markets or the economy and believe that the advisor just does not understand the seriousness of the current situation.
When the markets dived in February 2016 many were sure that was the beginning of a bear market but then the markets recovered rather quickly from that downturn.
A bear market can be defined as a decline of 20% or more.
How long do they last? How often do they occur? One symptom is that it is a time when more investors are pessimistic about the markets.
Advisors (most) do understand the seriousness of the current situation and realize that it has occurred many times over the history of the stock market. They also realize that it is unpredictable.
The key I believe is to have enough in safer investments (cash and cash equivalents) so that you can hang on for the inevitable down market and eventual recovery.
"Years of safety" has been a term used by many planners to prepare for those down periods and one that I subscribe to also. Especially, when in or near retirement this period can be calculated as years - not months.
How many? Depending on your situation it could be 3, 5, 7 or more years.
If the markets perform like they did in 2007-2009, will share prices go down and never recover their losses? Never? That period lasted about two years and the recovery took another three to four years but, indeed, did recover.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.