Sunday Morning Quick Hits # 9: Springtime is a Good Time to Review Your Financial Plans.


“China Market Drop Leads to Worries of Further Turmoil”. Wall Street Journal – January 4, 2016

“Dow, S&P Off to the Worst Starts Ever for Any Year”. Wall Street Journal – January 7, 2016

“Nikkei Posts Largest Weekly Percentage Drop Since Financial Crisis”. Wall Street Journal – February 12, 2016

“S&P 500 Turns Positive for the Year.” Financial Times – March 17, 2016

“Stocks Grind Out Another Blue Chip Day – Dow Climbs 49 Points, Notching Their Fifth Win in the Past Six Trading Days.” Wall Street Journal – April 20, 2016

This first few months of 2016 certainly provided investors with a tale of highs and lows. At times, headlines were at or near proclaiming Armageddon. It was a tough time for investors and advisors alike, as market volatility, fears and concerns elevated rapidly. Global stocks hit their chaotic year to date lows on February 11, down by nearly 12% in just six weeks, leaving many investors concerned that the free-fall in the markets might never end ... until it did.

Global equity markets thru April 19, 2016, have quickly rebounded, climbing nearly 15% and into positive territory for the year. Bonds continued to provide value from a diversification and return perspective, helping smooth out overall portfolio returns in the face of uncertainty this past quarter. The total bond market posted a 3.03% positive return in the first quarter, as market interest rates and bond yields fell, driving fixed income prices higher.

In the midst of the market declines and tumult, which are unfortunately inevitable, unpredictable, and difficult to handle, followed by the rapid ascent, we are reminded of a few key points that drive long-term investment success:

  1. Markets are and will continue to be volatile – so let them work for you. Investors are best to stay focused on the long run – which is extremely difficult to do. We don’t want to make emotional decisions, reacting to market conditions that may lead to making a poor choice at a bad time in the markets – such as selling out of stocks in early February, only to miss the market’s recovery into April 2016. Don’t try to outguess the market, or chase performance.

  2. Regular reviews of goals and objectives with your advisor helps to maintain discipline, particularly during the toughest times. The ongoing planning process and a disciplined focus on implementing long term strategies are key to improving the probability of reaching financial goals and objectives.

  3. Investor risk tolerance must be aligned with investment policy statements and asset allocation targets. Focusing on what you can control as investors is critical. You can't control the markets, so a proper financial plan in line with your overall risk tolerance is needed to fit your goals and objectives, and in line with overall risk tolerance. Only then can you build investment strategies around proper dimensions to achieve higher expected returns – diversifying widely across global assets at the lowest possible cost. And with increased taxes today, you must focus on tax efficiency to help increase wealth creation.

In closing, springtime is a good time to review your financial plans. Get an annual financial “check-up” – before the busy summer months get more of your attention!

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