Tyson Smith

Recent government policy decisions and a series of disappointing economic reports have fueled extreme volatility in U.S. and world investment markets. This month has seen some of the steepest one-day drops in the Dow since the height of the global financial crisis in 2008. But it is important to keep these events in perspective.

The U.S. financial system is in better shape today than it was in 2008. Most individuals and companies are far less indebted now, and there is plenty of liquidity in the system. While the S&P downgrade of U.S. debt likely contributed to the most recent stock selloff, the downgrade itself – like recent market volatility – is rooted as much in a lack of confidence in our policymakers as in our collective frustration with the pace of recent economic growth.

The markets have seen the most common reactions to such fluctuations play out. Some stock investors fled stocks to the perceived safety of gold and (some might say ironically) U.S. treasuries. Those investors will likely try to time their re-entry into the equity markets in the coming weeks and months as circumstances, available information and sentiment inevitably change.

For investors embracing a long-term wealth management strategy, this kind of radical reallocation in response to specific market events can be a very dangerous thing. It is obviously important to review your portfolio in light of major environmental changes to ensure that your overall asset allocation and individual holdings are still consistent with your objectives. But wholesale shifts in strategy are rarely necessary if the basic assumptions of your wealth management plan – your goals, risk tolerance and time horizon – haven’t changed.

If there have been significant changes in your life recently – such as a job change, birth, death or marriage – or you are feeling uncomfortable with your current asset allocation and risk exposure, please give me a call. However, if your personal situation and goals have not changed since our last discussion, you can feel confident that the plans we have created together and the investments we have made to help you reach your goals are being closely monitored to ensure they stay on track through the market’s inevitable ups and downs.

Thank you for your continued partnership. I remain dedicated to earning your trust every day.