Related: Cutting Through the Market Noise
My observation has been that the level of advisor/investor concerns during the correction has been highly correlated to investment timeframe. Investors with a truly long-term horizon have felt less concern than those with short-term needs for their investment funds. No one enjoys market declines, but investors with portfolios that have done what they expected them to do during the correction are far more likely to weather the storm. Corrections have a way of either confirming the alignment or exposing mismatches between investment allocation and investment horizon. Corrections are an appropriate reality check on risk and return assumptions that underly every investment portfolio.
We continue to believe in positive, long-term investment returns. We continue to believe corrections and bear markets will be a part of an investor’s long-term market journey. We continue to believe there are many appropriate and useful investment allocations and strategies that can be combined in a way that benefits an investor. We continue to believe that a correct understanding of asset class and strategy characteristics will assist in avoiding destructive tendencies of investment euphoria or despair.
The correction came. Now what? As students have returned from winter break, the same advice you would give your children is true for all of us as investors: Be disciplined. Do your homework. Show grit and persistence. Learn to recognize the difference between “real” and “fake” information. Don’t worry about what others are saying. Be kind. Recognize who has your best interests in mind and who you can trust. Over time, good outcomes follow good behavior.