“Which is more valuable–advice given in a noisy, crowded room or advice given in an empty forest?  Neither, no one is listening…”
 –The Maven of Financial Literacy
I consistently read Howard Marks’ “On the Couch” memos as he is probably one of the best distressed investors of our time.  He and other investment sages have great wisdom that investors should heed.  The propensity to rush into a “buy or sell” decision in light of recent market volatility is compelling but not always rewarding.  Jason Zweig recently wrote about the post-election history of markets and how in some instances they were contrary to “conventional” wisdom. (It’s worth the read.)  Thus, setting the tone for this pre-Thanksgiving post about some things you should and should not do when it comes to your investment portfolio.

 

You SHOULD NOT react, but you SHOULD think…
If your investment strategy is long-term in nature, then there are probably no immediate adjustments that need to be made.  Stop and think about what investment goals you have for your entire portfolio of assets.  (See this post on Human Capital or this one on portfolio construction.) Long-term growth will likely be achieved regardless of current or interim political changes especially if your own a well-diversified portfolio.

 

You SHOULD NOT blow up your current plan, but you SHOULD strategize…

If you are working with a financial advisor, this is probably where your guy or gal really earns their fee. Many investors will do something in their portfolios they will regret (e.g. buy high and sell low) unless they are working with a financial professional that is giving good advice.  I’d highly recommend scheduling a strategy session with your person to work through different market scenarios.  Even if no action is ultimately taken, the meeting will likely give you peace of mind about your current plan that is in place.  (Shameless plug:  Get our free year-end tax planning guide here.)

You SHOULD NOT rush to a decision, but you SHOULD procrastinate…

This is likely the only time where advice to “procrastinate” is acceptable.  With the recent market volatility, it is probably good to sleep on what you feel is a good decision for a night or two.  Good ideas are usually good ideas two or three trading days later (especially in the case of long-term investors) and this allows time to consider any potentially impulsive, emotionally biased decisions.

Whatever your method for portfolio construction and investment, remember the wise words of Sir John Templeton:

“history shows that time, not timing, is the key to investment success.”

Invest Wisely!
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