Anyone can make money in a bull market. It is times like these that a good financial advisor earns her stripes — by counselling clients that bear markets are an inevitable part of being in stocks. While some advisors are ignoring concerned investors, a few are offering words of comfort to clients.
Rob Smith, a financial advisor and author of Dollars From Change, posted the note he sent his clients on The Wealthy Boomer blog. In it, he stresses the importance of investing long-term cash is a diversified basket of equities and holding it through the tough times:
I can’t estimate the value of your, or any, portfolio over the next 3-5 days, or 3-5 months, nor do I think anyone else can. I am tremendously confident though that over the next 3-5 years, we will look back to today as a time when buying investments – not selling them in a panic – was clearly the correct and most prudent course of action.
Many clients ask whether we should be getting out of the markets now to prevent further possible losses and then getting back in when things “feel better”. This simply does not work. It won’t “feel better” until after the market has risen and jumping back in then means you have missed the first, and usually the most significant, part of the upturn.
Andrew Baechler of PWL Capital shared a slide show that compared the current crisis with previous ones. Is it really different this time?