Some of you may be alarmed by news of the down market, but it’s time to take a breath and not panic. So what is going on? The Dow Jones Industrial Average (Dow) is officially in a correction, which is defined as a 10 percent decline from its peak. You may recall from our meetings and correspondence earlier this year that we at ACap have been expecting this correction. In anticipation of such a decline, we have been intentionally accumulating cash in your accounts in so that we can use this down market as an opportunity to buy. As a result, you may receive trade confirmation emails.
As we mentioned in the June Market Update email, while down markets are never pleasant for investors in the short-term, they are good buying opportunities for the long-term term investor with at least a 5-year holding period.
But why did the market take a downturn? While there’s really no clear answer to that question, the likely cause is simply consumer panic. As the market slowly declines, many investors panic and sell too which fuels the fire. Selling your investments in a panic is a bad idea. Those who sell their holdings in an acute down market are often times left in a worse position than they would otherwise have been in if they had held their investments through the market decline and waited for the markets to recover. Markets do recover.
So what can you do? As is our philosophy, it is imperative when developing and maintaining your investment portfolio that you always plan for a down market. At ACap Asset Management, we ensure that your portfolio is well balanced and ready for a down-market so you don’t have to panic. Not only do we invest for long-term growth, but we also use down days like today as opportunities to buy assets on sale. Who doesn’t like a good sale?
Recent market declines highlight the reality that markets do fluctuate and thus, the importance of a strategic financial plan. The future is unpredictable, but we are confident that the only way to beat inflation in the long-term (5 plus years) is through a well-diversified, equity portfolio.
If you have any questions regarding your accounts or would like to schedule a consultation with us, please do not hesitate to contact us at info@acapam.com
