When the Mud Hits the Fan
The final post in this three part series is what to do during the panic. Here is my section answering that question briefly and succinctly. We are monitoring client portfolios and will make recommendations when appropriate for you.
It’s one thing to speak in generalities about what to do before a downturn. It is another thing altogether to actually implement the plan when the downturn happens. There is fear, there is confusion, there is despair. There is blood in the streets and prices are very low. Not that we want to rejoice in other people’s pain, but we need to be ready for opportunities that can present themselves during times of uncertainty. As mentioned in the chapter on investment strategies, the last tip was to rebalance your portfolio, which forces us to buy low and sell high. When the correction happens, this is the time to buy low. It is difficult as mentioned above to sell when things are going great. It is probably more difficult to buy when the economy is wobbling on the axle. Acting in a contrarian manner from your feelings can make a big difference in your return over time.
Jonathan Baird , CFP®