As reported by CNN Money, 58% of global money managers surveyed by Bank of America Merrill Lynch believe that either the stock market has already peaked or that it will peak this year. Given the rough start to the year, it’s not hard to see why they are feeling this way. So what happens next? A prolonged downturn?

It’s possible. Cracks are starting to form in the global economy. The U.S. economy is slowing. GDP is being revised lower. China is bracing for a slowdown and easing monetary policy. Often the stock market is a leading indicator for the economy, meaning that it plunges just before the economy does.

Whether the peak is now or a year from now, it is coming. And investors need to have a plan in advance. Downturns can be severe and prolonged. Remember the start of the 2000s? The market declined for three years in a row, devastating portfolios of millions of investors. Remember 2008? The market lost nearly half its value and took years to recover.

Traditional wisdom would say that it is best to stay put. Whatever you do, don’t sell! And stick to your long term strategy. Well if your long term strategy is to simply stay invested in the same funds forever, this may not be the best approach. In fact, I believe this is a view that has been promoted by the mutual fund industry for the sake of their own pocketbooks—in the interest of not losing assets.

Sometimes investors stay put simply because they are caught between two dilemmas:

  1. Oh man, I should have gotten out of the market
  2. But if I get out now, I could miss the upswing

If you’re nodding your head right now, you know what I mean. These ideas arise from two very human emotions: regret and fear. These emotions cloud our judgment and prevent us from making good decisions. And both of these emotions come from too much attention on the past.

We believe the best thing investors can do is be forward-thinking. The past is done. Could have, should have, would have doesn’t work in the markets. The only thing that matters is what’s next. You’ll never time the market just right. So stop with the could-have’s and the what-if’s.

The smart money knows there’s always a bull market somewhere. For instance, in 2008 when the sky was falling, long term treasury bonds did exceptionally well. And while the S&P 500 declined by almost half, there were some sectors that did better than others. Evaluate the investment horizon for opportunities and invest in whatever you think is the best opportunity at the time. If there’s another opportunity that is more attractive than your current holdings, go there.

Want to evaluate where you are and what attractive opportunities still exist in the markets? Call me today! I’ll be happy to talk with you. 

888-510-2362