One of the most difficult exercises for long term investors is staying the course in the face of sizable market declines. Owen wrote an excellent article just last month on the market’s activity since the beginning of the year and we’ve seen further declines since then. Times like this really try investors’ patience. While remaining invested is the best strategy for long term portfolios, it isn’t easy to watch as your holdings decline. Barry Ritholtz writes: “The easiest button to press in the world is the one marked “Sell.” It’s a salve for your emotional distress, especially when facing volatile, disruptive stock markets. Panic selling might ease your upset stomach or help you sleep better, but it wreaks havoc on your portfolio.”
We couldn’t agree more and want to recommend an updated article from Liz Ann Sonders who is the Chief Investment Strategist for Schwab. The article is titled” Panic Is Not a Strategy – Nor is Greed“. The article is a treatise on what many investors are feeling right now and why a disciplined investment process is so important to success. Note that there is nothing new here, the article has been updated many times. For those of you who are our clients, you’ve heard much of this advice before as we are constantly talking about making plans and staying the course. But it’s a good reminder.
Horizon Wealth Advisors is a Houston based fee-only wealth management firm. Horizon is a fiduciary advisor. We specialize in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.