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It’s been more than a year since we have seen new highs on the major stock market indices. While we’re less than 3% from the highs of the S&P 500 and Dow Jones Industrial average, fear and pessimism are rampant. We’ve added several new panic phrases to our list of irrelevant news events as it relates to a long term portfolio: “Brexit” (the potential British exit from the European Union), “Zika Virus” and wait for it….”presidential election”. There’s more cash sitting on the sidelines than any time in the last 15+ years.
 
How We Got Here
After a 5 year ripping bull market where the markets increased more than 200%, the markets have essentially rested. In the last year, while failing to make new highs, we’ve experienced two near 15% market corrections. Small cap and international markets have substantially underperformed the S&P 500 over that same time.
 
Over the last twelve months, where the Dow Jones is up 1.5%, the small cap market index (ie. Russell 2000) is down more than 8.5% and broad international markets (including the EAFA index) are off nearly 10%. Therefore, a diversified equity portfolio including small cap and international stocks could be down anywhere from 3% to more than 6% depending on portfolio weighting. This is understandably frustrating, but nothing to be concerned about.
 
What Should You Do?
First rule: Never ever try and predict the markets as market timing does not work. We don’t and neither should you. Second, as a general rule, if your goals haven’t changed, don’t make any material changes in your portfolio. Third: Have faith, patience is a virtue and this malaise will pass as it has every other time in history.
 
Now is a perfect opportunity to review the big picture and get organized. Reviewing yourportfolio allocation in conjunction with your goals as well as ensure estate planning and insurance documents are in place and correctly documented is always beneficial. It’s also a perfect time to get a refresher on all new tools we have to help make life easier. In the end it’s critical to focus on what you can control: your emotions, your reactions and your decisions. You can’t control the election, the markets, or the “Brexit”.
 
Ultimately, life’s about having a good time doing what you love without worries about money. We’re here to help make that happen for you. If you’re concerned about the market, your portfolio or something entirely different, please reach out to us- that’s what we are here for.
Gavin Gleason, President
 
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gavin@gleason-group.net    (502) 882-7300

The Gleason Group 9418 Norton Commons Blvd, Suite 100 Prospect, KY 40059

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