On Monday March 9, 2020, when the stock market posted the worst point loss on record, I called up my financial advisor to discuss our strategy. Her response was, “Just ride it out.” I looked at various blogs online, and that seemed to be the consensus. A lot of them said, “Market timing doesn’t work.”
However, I lost more than half in the Great Recession, and quite a lot in the Dot Com Recession, too. So, I’m just not comfortable sitting on my hands for the next downturn. I’m too close to retirement to lose that much again. However, I have no clue of what to do.
Stressed Out and Clueless
Dear Smart to be Stressed Out,
Here are a few facts to consider.
If you lost more than half twice in the 21st Century, that’s a big red flag that you have far too much at risk. If we are entering a recession, and your strategy is to ride it out, you are risking losing half of your wealth again – just as you did in the last two downturns.
If you are close to retirement, you aren’t supposed to have very much at risk in the stock market. Even if you are just entering the work force, it would be a good idea to overweight safe since this could be a recessionary year. If you don’t know how to read your brokerage statement or your retirement plan, you may need to get an outside, unbiased 2nd opinion to know what you really own and how much you really have at risk. If you’re being counseled to ride it out, then you might just hit a lot more sales-speak when you for details to understand exactly what you own and why.
So, in summation, “Ride it out” is never a good idea. If you are on a losing team, then you would work hard to get a new game plan and to strengthen the areas that are weak. It’s true for winning in sports. It’s true for winning in life. It’s true for winning in investing. Wisdom, a good plan and right action are the cure.
You are stressed out because you know deep down that your plan is wrong. That's smart. However, now you need to learn what a better plan looks like. We're here to help. Call 310-430-2397 or email info@NataliePace.com.
If you’d like to see what a personalized sample nest egg pie chart looks like, just email info@NataliePace.com or call 310-430-2397 to access our free web apps. If you’re interested in knowing exactly what you own, how much at risk you are for losses, and what you can do to protect your wealth, then consider getting an unbiased 2nd opinion on your current financial plan. Call 310-430-2397 or email for pricing and information.
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Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.
ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.
Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
Natalie Pace is the co-creator of the Earth Gratitude Project and the author of The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She blogs on Huffington Post and Medium, and is a frequent guest contributor to national news shows and magazines. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.