Consider the Big Picture During Periods of Market Stress

Consider the Big Picture During Periods of Market Stress

May 13, 2019

Short-term stock market volatility can cause us to lose perspective. In times of market volatility, you may see alarming fluctuations in your account balances, making it tempting to adjust your asset allocation in search of calmer waters. Yet it's important to consider the performance of a balanced portfolio over time (shown below).

During times of market stress, you may be tempted to act in response to short-term market fluctuations. However, in all market conditions, one of the most important things to do is to stay disciplined and not change your long-term investment strategy in reaction to short-term market fluctuations.

At Portfolio Solutions®, your portfolio is built with your long-term goals in mind. After speaking with your Portfolio Solutions® Financial Advisor, an appropriate asset allocation is agreed upon based on the level of investment risk you are willing, able, and need to take – all to help you achieve an expected return to reach your financial goals. Short-term market fluctuations should have no bearing on this decision.

Portfolio Solutions® will continue to monitor your portfolio to keep your strategy in place and disciplined. If you have specific questions about these recent events, or recent changes in your long-term financial goals or financial status, please don’t hesitate to contact us by calling (248) 689-1550.

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Sources: Vanguard calculations, using data from S&P Dow Jones Indices, Bloomberg, and Thomson Reuters Datastream.

Notes: Growth of $100 begins at January 31, 1960. U.S. stocks are represented by the S&P 90 Index from 1926 to March 3, 1957; the S&P 500 Index from March 4, 1957, to 1974; the Dow Jones Wilshire 5000 Index from 1975 to April 22, 2005; and the MSCI US Broad Market Index thereafter. U.S. bonds are represented by the S&P High Grade Corporate Index from 1926 to 1968, the Citigroup High Grade Index from 1969 to 1972, the Lehman Brothers U.S. Long Credit AA Index from 1973 to 1975, and the Bloomberg Barclays U.S. Aggregate Bond Index thereafter.

Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Please remember that all investing is subject to risk, including the possible loss of the money you invest. Bonds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.

All information presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service, nor should it be construed as tax or legal advice. Please click here to see our blog disclosure, which immediately follows the “Applicable Law and Venue” section.