I sure picked a good week to be on vacation!
I’m back from a mostly restful week off and wouldn’t you know it, the stock market decides to cause a bit of havoc. Ups AND downs are part of investing, and we have seen lots of them in our years.
That statement isn’t meant to diminish the emotional pain of seeing a day like Monday, August 5th and the impact on your hard-earned savings. Renowned psychologists Daniel Kahneman and Amos Tversky famously coined the term, Loss Aversion, in their studies. Loss Aversion speaks to the fact that we are all more sensitive to losses in our portfolio than we are to similar gains.
Based on the emails I got last week, that was happening for many clients.
I could write about what caused the 3% drop in the market last Monday but I think my friend, Dr. Preet Banerjee did the best overall explainer in this video he posted to his YouTube last week. It’s 11 minutes but well worth your time.
Now the question we should be asking is; what do I do now?
With the move to Q Wealth, everyone did a Risk Tolerance Questionnaire. That questionnaire gave me, and you, valuable information in order to make better decisions with your money.
As Dr. Banerjee said later on in his video, having a portfolio “you can stick with” is the best outcome and that Risk Tolerance Questionnaire gives us important information to help us build that exact portfolio for you. This is why we are such firm believers in them.
The funny thing about filling out a questionnaire is that you can’t actually know your willingness to take risk unless you have lived a day like August 5th. To read headline after headline across your screen screaming, Chicken Little like, that the sky is falling.
I’m here to tell you the sky is not falling and that your money will remain safe.
In other words, we will continue to build investment portfolios that are built for the long run and geared towards your ability AND willingness to take on risk while also working towards your financial goals. Nothing that happened on August 5th has changed that plan.
