For those of you who follow these things closely, stock market volatility can be unnerving. But for seasoned and educated investors, these types of markets are opportunities. As I have mentioned many times, your Matson Money team is hard at work rebalancing your portfolio (sell what is up and buy what is down), taking advantage of these turbulent markets.
Below is a short video with Steve Miller of Matson Money who explains how, when and why to rebalance which is a critical step in portfolio management.
1. Stock market declines happen all the time. On average, throughout history, 10% declines in the market have happened about every 11 months. Yet, the stock market has continued its march upward over the decades.
2. Markets recover - often quickly. For example, just last August, the market dropped more than 10%, but by November, the market recovered to where it had traded before the drop. Historically, even the largest market crashes have eventually given way to new all-time record highs.
3. The market's best days have historically followed substantial drops. Those who panic and sell after a drop always miss out. You actually don't "lose" if you don't sell. You still own the same amount of shares in the fund.
4. In the long run, stock returns are positive. There has been no 20 year period in which stocks have lost money. that's true even when you consider the impact of inflation on stock market returns.
The most important thing to do during volatile times is to know and be assured that both me and your Matson Money team are continually monitoring your account, making sure we are taking advantage of every opportunity for the long term financial success of your portfolio.
As always, please feel free to email or call me anytime.