There's a headline in today's Wall Street Journal that reads "Market Volatility Teaches New Investors That Stocks Go Down, Too" https://www.wsj.com/articles/market-volatility-teaches-new-investors-that-stocks-go-down-too-11599816602?mod=hp_lead_pos10
Those of you that know me might recall from our first meeting that I might have said "I'm not a lot of fun to talk about at a cocktail party. I will never call you with a hot stock tip." Very true. Over the last few months, we've seen lofty gains in many of the tech darlings of Wall Street. We can all be forgiven for wishing our entire portfolios were in just that sector. This week we were reminded that the stock market can feel a bit like gambling if you are always chasing a short term gain and the resulting high. New investors are learning the hard way that the market does not always go up.
A truly prudent diversified long term portfolio will certainly have a sizable allocation to large cap growth stocks, but not to play the daily ups and downs and not as the only asset in a portfolio. I believe in long term evidence based investing and structure my portfolios accordingly. I whole heartedly believe that long term money belongs at least partially invested in the stock market, but I don't speculate and I don't take chances with funds that we might need in the near term. Sometimes clients like to have a "play account"; if that's feasible in a plan without affecting financial stability, that's great, but my financial plans will have diversified, low cost portfolios as the building blocks for long term investment success.
Remember - Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”
Let me know if I can help you...