August 2011 Newsletter: Comments on Recent Market Volatility

Posted by on Aug 16, 2011 in MFA Insights

We are getting the market volatility we expected in our email of July 21st and then some. Despite the credit agency downgrade of US Treasury debt, our core bond fund holdings are holding up well. The stock market, as you know, has reacted violently.

We all have vivid memories of 2008 when stocks lost significant value. Our belief that trying to time the market is foolish remains unchanged. A few clients suggested that we exit the market prior to the August 2nd debt ceiling deadline and reinvest on August 3rd. Of course, we now know if we had gone along with that plan, we would have stepped in front of the significant downturn that is playing out now.

Following every move in the markets and listening to varying advice from pundits can be maddening. We suggest clients resist the urge to track it too closely and step back and try to carry on as if the markets were flat. Remember how you felt during the downturn in 2008 and early 2009? In our experience, by and large those who held on when it felt worst have come out far better than those who panicked.

We are monitoring your accounts closely and rebalancing when they deviate too far from your target allocation. We ask that you keep an eye on your time horizon. If you don’t need to withdraw most of your funds in the next five years, you have time for it to recover.

Sincerely yours,

Tim Harrington, CFP® David N. Shore, ChFC

We are currently accepting new clients by referral.