As you all know, the results of the US Presidential election were not what investors around the world anticipated. Surprise and uncertainty breeds volatility. Similar to the aftermath of Brexit last June, when UK voters approved to leave the European Union, markets around the world and the dollar are reacting negatively as we write this note.
We do not have a crystal ball and therefore cannot predict how much they might decline and whether they will recover as quickly as the UK market did before going to new highs since then. What we do know for sure is that, today, as you read the news and listen to the pundits, your financial objectives remain the same: your children’s college tuition needs to be paid, your life expectancy is the same, and your retirement income from social security still needs to be supplemented by your savings…
Looking at your portfolio, the portion invested in equities will decline with the stock market, but other parts will not be affected as much. Some investments might even go up a little in what is called a ‘flight to safety’. This short-term volatility does not mean that your portfolio’s asset allocation will not be able to deliver the long-term return that you need to reach your goals.
We always like to compare investing with sailing: we know that we need to sail across the ocean to meet our objectives. We also know that there will be storms along the way, and that sometime, we might run into dangerously choppy seas. So, we built a diversified portfolio capable to sail across and handle bad weather. It might take some water on board during the worst storms, but it will not sink. It is important, however, to keep a steady hand on the wheel to make it safely to port on the other side. Like numerous others before, this storm too shall pass. History teaches us that we should ride it out.
As always, feel free to call us if you wish to discuss further.