Investment Strategy

As of yesterday, September 28th, the Dow Jones Industrial Average (Dow), a measure of 30 large U.S. stocks, continued to post a negative result as compared to its high for the year, down -13% from its peak in May.

We have shared with you that we believe that the likeliest scenario for current stock market volatility is that we are experiencing a market correction, defined as a downward move of-10% to -20%. The preponderance of the data continues to point us in that direction. However, there is some data that points to a future scenario where market declines would be greater than a "market correction." Investment professionals that analyze the market using statistics call some of these scenarios “Dow Theory Sell Signals.”*

Should you reduce your risk, by virtue of reducing your equity positions in your portfolio, given that there is a risk of downward movement beyond that of a correction? We recommend not, but please call us to discuss this or with any concerns.

We recommend you continue to follow your current strategy for the following reasons:

  • You, and we, have put a good deal of thought into your current strategy with many market scenarios in mind when these strategies were developed. You’ve chosen a thoughtful balance between growth potential and risk management based on your time horizon, goals, and preferences, while recognizing that downturns of various levels do happen.

  • Hopefully, we are experiencing a stock market correction. But, we note that investors, who held through the bear market of 2008-2009, the worst downturn since the Great Depression, were made whole within two to three years as the markets turned backup.

We continue our work of focusing on your short- and long-term goals through various means: proper diversification; incorporating investment trends; tax reduction strategies; planning for the future, etc. Of course, we also continue to recommend, for a portion of your strategy, “contrarian” investment strategies when they make sense. These seek to help you profit when valuations are not aligned correctly.

Please call us with any questions or concerns. We would be delighted to review your investment strategy and preferences with you.

Investment NewsLaura Kuntz