We’re getting this question from clients and other people often these days. They’re referring to the investment markets that have taken a sharp swoon recently. The short answer we always give is, “I don’t know and neither does anyone else.” This is the nature of investing: the future is un-knowable. Any attempt to predict future events based on past action is futile. It’s like throwing chicken bones in a wooden bowl and trying to predict the future.
So what should you do as an investor? It depends. Everyone’s situation is different so a universal answer is not possible. But here’s a clue: if you are worried about the future direction of the investment markets (note, “worried” is the key word here), then your portfolio is probably too risky for you at this time of your life. An investment market correction like the one we’re experiencing now is a predictable event. Not “predictable” in the sense that we knew it was going to happen in mid-August 2015, but predictable in that investment market corrections are regular events that occur at irregular times. Your portfolio should be set up with this fact in mind.
Since markets go up and down at irregular times, your portfolio needs to be set up for you so that you are not worried about something you don’t control. It’s a fact of investing life. Get used to it and set up your investment portfolio that plans for both growth and correction to the degree that fits you. It might be too late to make changes to your investment portfolio for this correction, but when the markets come back, and they probably will this time since they always have, it’s your opportunity to create the portfolio that is right for you.