Happy New Year, everyone!
As the 2017 market analyses (and a few callouts to missed forecasts!) have begun rolling in, so too have the reports of long and strong positive performance from almost every corner of the market.
In particular, the S&P 500 Index has been on a record-busting tear, experiencing positive total returns every single month last year. This is “the first time in records going back to 1970 that’s happened,” reported the Wall Street Journal, along with the observation that these returns were delivered in an exceptionally smooth ride, with the fewest up-or-down return swings of 1% or more since 1965.
Not surprisingly, we’re also seeing predictions for 2018, which seem optimistic for the most part, tinged with just the requisite amount of caution.
So, what are you supposed to make of all this? If you believe in evidence-based investing, disciplined rebalancing, your personal Investment Policy Statement (IPS) will guide the way forward – whether it’s to enlighten you during dark and scary markets, or to offer a clear lens through which to view the recent rose-colored returns.
Has the smooth ascent lulled you into forgetting what it feels like to be afraid? (Remember 2008?) 2017 market growth has been gratifying indeed. But if your highest-flying holdings have significantly outpaced your planned allocations to them, your IPS tells us when it’s time to get back on target, replacing blind ambition with thoughtful, “buy low, sell high” rebalancing.
Has the unprecedented run left you a little nervous? When it comes to market returns, there’s plenty of evidence to suggest that nothing this good lasts forever. But is there a right way to respond to this rational concern? Again, your IPS informs us on how and when to rebalance back to target in high-rising markets by shifting a portion of past gains away from market risk, without diminishing your desired exposure to future expected growth.
In short, whether current markets leave you enthused and excited, fearful and fretting, or a little bit of both, AMDG Financial remains committed to: (1) applying evidence-based investment theory to your portfolio management, (2) adhering to your IPS as our ongoing road map, and (3) incorporating rules-based rebalancing to help maximize your expected returns while minimizing the market risks involved. No strategy is guaranteed to succeed, but we continue to believe ours is the most practical and prudent approach to achieving your financial goals, come what may in 2018.
If you don’t already work with a financial adviser, I invite you to consider investing a little time with us before deciding where to invest your money. AMDG Financial is a fee-only, fiduciary advisory firm that takes pride in helping our clients become good stewards of their money. We would be pleased to meet with you to discuss your needs and explore the opportunity to work together. To schedule a complimentary, no-obligation appointment, feel free to contact us via the web anytime, or call us at 734-737-0866.