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After the (Market) Deluge

It’s early October and if you have not already received your Q3 performance results for your investments, they are coming soon. It is with a mixture of dread and resignation that we await the actual numbers since we all know that most of them are not good. The markets fared poorly in the past few months and the value of most investments fell, sometimes precipitously.

Of course, most of us have been here before. In 2008-2009, in 2001-2002, and even before then, the markets have dipped and dropped and here we are again. Did we do or learn much in those previous years? Do we need to do much today? The answer depends on many factors ranging from the old standby of considering our long term goals to our personality, whether inclined to inertia or over reaction. What it probably comes down to is fear and greed and how much those two market drivers influence us to act.

My inclination is to remain on the sidelines at this point to see when market volatility slows before making any big moves. Buying on the dip is sometimes a good strategy but one cannot be sure that we are at the bottom of that dip yet. Selling losers can be appealing but that forecloses any chance of recouping losses if the market goes the other way.

Perhaps the better approach would be to avoid any large moves at this time unless there is a factor clearly driving such a move. The drivers might be tax savings or a particular need in your personal situation. The drivers probably should not be what everyone else is doing or what the financial industry media is saying on any given day. Have you ever noticed just how many opinions are being voiced daily and how they not only seem to constantly change but how they do not appear to have much substance? Don’t bet your investments on such advice – think it through and decide what you want. 

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