But if you’ve done your homework and preparation, facing a test on Monday (or any other day) becomes much less nerve-wracking. And as the markets have shown us so far this morning, it might just turn out to not be as awful as you thought it would be.
You have probably heard that last week was one of the worst weeks for the markets in quite some time, with the DJIA losing over 1,000 points. This morning, Dow Futures sold off, leading some to fear even more of a selloff…but as markets opened today, they rebounded significantly, with the Dow recovering more than half the losses experienced at the market open in just one hour of trading. We might not have seen the last of this selloff—but it does go to show that agonizing over the ticker tape can cause a lot of unnecessary stress!
We’ve Done Our Homework
We have been saying for a long time now that markets have been artificially engineered with interest rates near zero and false economic indicators. Eventually, this was bound to play out with prices correcting. The good news is that during this painful selloff in equities around the globe, another asset class—U.S. fixed income markets—are jumping in price as investors flee to safety. We have held a very sound and diversified portfolio of these securities for a while. Their role is essential and we are fortunate to have them as they are our anti-lock brakes, air bags and insurance policies during these difficult times.
Analyze, Don’t Agonize
In this instance, the indicators point to a global shift occurring. This shift is excellent news as it helps us in the long term. It is looking more and more likely the U.S. will be the market leader for growth over the next five years or longer. China is going through serious trouble and countries around the world need liquidity. This bodes well for our nation, our markets and our currency. It will pay to be an investor in U.S. markets.
As unpleasant as selloffs can be, remember:
- Global markets are adjusting to the U.S. likely being the beacon for future global growth.
- Interest rate increases may still happen, but they will likely be brief and small based on market prices.
- Liquidity is always critical, and the U.S. has the most liquid markets in the world.
- Your bonds are rising in price as fear hits equities.
- Reserves will be put to better use as market selling hits a capitulation point.
- Your portfolio was already well-positioned for this type of adjustment.
What We’re Doing to Protect Your Money
Corrections do not hamper income, as that portion of your portfolio is protected in specific segments. Your income portfolio does not rely on equity prices and reserves are sufficient within the portfolio. Looking for value is something we regularly look to do and for much of the past year or so, we have felt the markets were selling at a premium.
I hope this helps to ease your mind as we all watch this correction unfold. No one likes facing tests on a Monday but with the proper preparation, market corrections result in opportunity!
Be well and feel free to let us know if you have any questions. Despite the market news, enjoy the final days of summer!
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Halpern Financial, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Halpern Financial, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Halpern Financial, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Halpern Financial, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.