This has been a challenging newsletter to write. I began drafting this in October, and as I am finishing it now, the political and economic landscape continues to evolve rapidly. Over the past few months, we have seen a wide range of client reactions to the unfolding events. Capturing all these responses and addressing everyone's unique concerns in one newsletter is indeed a challenge, and I won't attempt to do that here.
As you're aware, there was significant anticipation and anxiety leading up to the November elections, followed by a mix of relief and continued anxiety afterward, depending on individual perspectives. As we approached the inauguration, some clients expressed concerns about potential changes under the new administration, while others looked forward to a new direction for the country.
January has brought greater market volatility than usual for this time of year, even with a new administration in the White House. Some of this volatility stems from specific company news and announcements, while other fluctuations result from changes at the federal level. It's understandable that we each have deeply personal responses to these developments.
As your financial advisors, our responsibility is to remain objective about your finances and set aside personal views, especially when you might be feeling concern or anxiety about the broader market or political economy. So, what should you do?
Let's walk through this step by step.
First, it’s important to pause and revisit your statement of financial purpose. This overarching financial goal directs the investment of your time, money, and resources. By first grounding ourselves in this purpose, we can maintain a clear perspective and make informed decisions.
Next, review your asset allocation. Ensuring that you are diversified across asset classes is key. Think about how much cash you have in the bank. How much do you need to feel comfortable? Diversification and maintaining adequate liquidity are essential strategies to weather market fluctuations. Has something about your personal financial situation changed recently or since your last check-in? Your personal situation is unique, so we want to make sure that you have the right ratio of cash, bonds, stocks, and hard assets for your personal risk tolerance as well as how much risk you can afford to take. Cash is the cornerstone of a solid financial plan.
Lastly, please reach out by phone or email with any questions or concerns. Harold and I are both happy to help with your financial planning, and Rheagan can tackle a wide range of questions. The best email address is usually help@flexfinancialplanning.com. This allows the best person to address your concerns. Either phone number will reach us no matter where we are. Neither phone number is specific to a specific office. We have three offices, and unless we are on the phone or in a meeting, you will reach someone.
On a happier note, Punxsutawney Phil saw his shadow on February 2, predicting six more weeks of winter, so get out your skis and snowshoes! Happy winter, everyone.
Asset allocation is an investment strategy that will not guarantee a profit or protect you from loss. A diversified portfolio does not assure a profit or protect against loss in a declining market.