20% Drop In the Stock Market Show 69

Michael Wilson (pictured below) is a strategist for Morgan Stanley. His firm is calling for a twenty percent drop in the near term for the market. “He sees earnings revisions from American corporations ‘and higher frequency macro data pointing to a decelerating economy, amid demand pull forward, supply chain issues and margin pressure; which he forecasts could lead to a 20% drop, a near-term outcome, in a research note dated Sept. 20th.”

Speculation may conclude that the bear market could turn out to be worse. We never hope for this, because most all investors are negatively impacted by a down market in one way or another. The point to note is that we are not helpless. We can take steps to create a safety net around our portfolio.

Bloomberg ran a recent article that said, “When the story of this era in financial markets is written, it will be said that many investors were overtaken with fanciful notions of money growing to the moon, leading them to make costly mistakes that could have been avoided with simple steps to safeguard and grow their savings. But this era is not over yet, and it’s not too late to get on the smart side of history.”

When there hasn’t been a major problem in the stock market in a decade, people tend to forget what may happen. The article continued, “Expectations about what a diversified portfolio can achieve have also become silly. In its latest survey of individual investors, French lender Natixis SA reported that U.S. investors expect their portfolios to generate a long-term return of 17.5% a year after inflation, a big jump from the already unrealistic 10.9% they expected in Natixis’s 2019 survey.” The old adage, “pigs get feed and hogs get slaughtered” seems appropriate.

There are a few ways to create safety nets around your retirement portfolio. We always want to keep six months of bill paying money in our savings account. After that safety net, there are allocations you can make with your money that carry less risk or no investment risk at all. The suitability of these strategies will vary from person to person.

It’s important to know what all your options are, because if you don’t, how can you make educated decisions? I’d be happy to schedule a 15-minute call with you to talk through all of your options. You may  call our office at 864.641.7955.

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