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Streamline Market Update, In Light of Recent Volatility

U.S. Dollar Declines Due to Political, Economic Jitters

Companies Go Abroad, And Jobs Go Along

For Gasoline, Little is Certain But High Prices

It's hard to watch the news anymore. I've taken it off my list of things to do in a day, to be honest. Clearly, as you can see from the headlines above, we live in uncertain historical times.

But those headlines are really from 1974.

It is difficult to "stay the course" when the media, friends, etc are telling you to head for the hills. No one debates that the last 33 years, even with the ups and downs, has been an overall favorable one for the buy and hold investor. The question is: Do we have the faith, patience, and discipline to stay the course now, and hold (or buy) during times like these when our emotions are telling us otherwise.

Study Shows Our Behavior Is Key to Investment Success

Dalbar recently came out with a study showing that the average returns for equity investors earned a 3.9% annualized return from 1986 to 2005. During that same time period, the S&P 500 returned 11.9%. The reason for the gross discrepancy: our behavior. We are wired to be fearful and sell when we should be buying, and to be optimistic and (dare I say it) greedy when things are going too well and we should be selling. I still run into people who "got in" in 1999-2000 (at the peak) and "gave up" in 2002 (at the bottom) and missed the recovery since then.

Take note of this illustration of the emotions of investors during the market cycle. As you can see, conquering our emotions in times like these can make a meaningful impact in our results.

"My Phone Still Ain't Ringing So I Assume it Still Ain't You"

Sometimes I hear people mention of their financial advisor that "he/she didn't call" when the market went down. In case you are sitting by the phone waiting for us to call you to "get you out," we probably won't be anytime soon. That's because our philosophy is to try and get your allocation to one that matches your risk tolerance, time horizon, and investment objectives, and for the most part, stick to with with minor adjustments along the way. It is impossible to predict the time to get out, and the time to get in, mainly because it is so difficult to reconcile these with our emotions.

I'm including a piece on the "Perils of Market Timing." While these are the views and opinions of American Funds and not necessarily QA3, I think it illustrates a key concept of "Time In, Not Timing" that matters.

All that to say, if the recent volatility is giving you the jitters, or your situation has changed, and you are questioning how you are positioned, we WANT you to call us and talk. Maybe it's more of a "counseling session" than an investment strategy meeting, but nonetheless, it's a chance to re-evaluate if you are positioned for persevering through this and not your own worst enemy.

If You Only Remember One Thing...

Famous philanthropist and Founder of Templeton Funds, Sir John Templeton (see one of his books on our bookstore link) once said:

"Buy when pessimism is at its maximum, sell when optimism is at its maximum."

I'll leave you with that and ask you which one you think we are experiencing right now.

Toby