This market (and attached chart) is not exactly for the faint of heart. Although no major drops, it’s been just up and down… ending up just a hair above where 2015 started.
The chart shows that in just the first 3 months of this year, we’ve had a roller coaster ride. The white line is the S&P 500 and the blue one marks the interim peaks and troughs drops and gains. Check out these 9 market moves within the year’s first 90 days:
| Down | -2.73% |
| Up | +2.97% |
| Down | -3.37% |
| Up | +3.54% |
| Down | -3.30% |
| Up | +6.14% |
| Down | -3.74% |
| Up | +3.33% |
| Down | -2.23% |
After all of that market movement, the S&P 500 index is UP just .44% for the year (as of 3/31/15).
One of the points that was repeated over and over again at the retirement planning conference I just returned from is that, with the bull market 6 years running so far (since the market bottom in March 2009), it’s more important than ever to manage risk rather than forecast (and hope for) average stock market returns.
One of the noted speakers said, “Investors are not risk adverse, they are LOSS adverse. Financial advisors don’t get paid to forecast markets, but to adjust to them and keep their clients out of harm’s way”.
Are you like most investors (particularly if you are retired and withdrawing money from your accounts to maintain your lifestyle or taking RMD’s) and feel the pain of loss 2-4 times as much as the exhilaration of potential gains?
With the stock market at virtually all-time highs, the overwhelming majority of speakers and participants there (including myself) are of the opinion that now is not the time for a buy, hold and pray investment strategy. It’s time to be tactical and be ready to go to cash.
I’ll write more about the conference topics that might be of interest to you over the coming weeks.
all the best… Mark