There has been a lot of excitement in the media lately regarding the recent volatility (mostly downward) in the stock markets of the world. The “recency” effect is’ human nature, and difficult to overcome. This effect makes us think that recent experience (good or bad), will continue indefinitely into the future. Starting in March of 2009, we had a strong market recovery, that people thought would bring in a new era of “stability”. We had over a year of relative calm, until the recent challenges in Europe. People thought the “calm”, positive gains would continue indefinitely. In past economic recoveries, it is normal to take a “break”. It is typical to have a 10% (or more) “pullback” in a bull market. The recency effect now feels like the decline will continue “forever”- just like it did in the Fall of 2008, or post-9/11 in 2002.
More than 70% of the companies that reported earning in the past quarter EXCEEDED analyst expectations on profitabilty. Employment levels in North America (where most of us hold our investments) have improved. Despite the pullback, we are still break-even for most accounts on a year-to-date basis, and substantially ahead of where we were a year ago.
The best way to overcome the fear at a time like now is to revisit your financial plan. It will provide the foundation for your decisions, and prevent emotional short-sighted decisions from hindering your progress. Stick with your strategy- since it is designed to provide you with the best opportunity to accomplish your goals. If you haven’t had your plan updated recently, (or worse yet, have no plan!) give us a call at (807) 467-4425 and talk to Rita about setting up a meeting. Feel free to check out the other sections of this site, too.