Log In   ·   Become A Member

In Unpredictable Times, Stay The Course

Rocco A. Carriero

The May Nasdaq market update. (Photo: twitter.com)

2017 has been an eventful year in the news, with a seemingly endless stream of fast-breaking developments coming out of Washington and other parts of the world. Through all this commotion, the stock market has posted significant gains. Investors who have stayed invested in stocks have likely been rewarded.

At the same time, investors can't assume that this market environment will continue. At some point, the long-running bull market (currently in its ninth year) could suffer a decline. Are there steps investors should take to prepare for that?

Avoid overreacting

Investors who become fearful that a market downturn may be in the offing are often tempted to sell some investments and move money into less volatile alternatives. That could include low-risk bonds or cash-equivalent investments. But taking risk "off the table" by selling stock positions has its own perils - what we call "opportunity risk," or missing out on potential future growth of those stock positions.

If you scan the news, you won't have any trouble finding contradictory predictions about which direction the stock market is going in the months to come. Some might say stocks are going higher while others will warn that a major market downturn is on the horizon. The reality is that nobody knows for certain what's going to happen in the stock market in the short-term. Basing your investment decisions on such speculation can be counter-productive.

Focus on your long-term goals

It is easy to be distracted by troubling headlines or sudden volatility in the markets. Too many people can make the mistake of extrapolating a passing piece of news into a longer-term trend, but quite often, that trend never materializes. Here are three keys to keeping your investments on track through periods of uncertainty in the markets:

1. Focus on fundamentals: Factors such as the strength of the economy, corporate profits and the values offered by specific stocks or sectors of the market are important. They tend to have a more meaningful impact on how stocks perform compared to short-term headlines that may briefly drive the markets.

2. Consider your long-term objectives: Your investment goals probably are not about using the money next week or next year, but many years from now, and over a longer period of time, such as through your retirement. What happens in the market today or tomorrow is not likely to have much bearing on your financial security in the years to come. Continue to invest focusing first on your ultimate objectives and the time you have to reach those goals.

3. Assess your risk tolerance and invest accordingly: If you are close to retirement, you may want to reduce your equity exposure. If you have more time to let your money work (and overcome any negative moves in stock prices), you may be able to handle more risk. Find a portfolio strategy that fits your comfort level and try to stick with it.

The key is to avoid rash decisions. Any changes made to your investment approach should be consistent with your long-term objectives.

Rocco is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Southampton, NY. He specializes in fee-based financial planning and asset management strategies and has been in practice for over 20 years. Advisors is licensed/registered to do business with U.S. residents only in the states of NY, NJ, TX, MA, PA, NC, NH, UT, NV, CA, NM, WA, VT, MS, MD, RI, FL, MO, SC, GA, MN, CT, AZ. Ameriprise Financial Services Inc., and its representatives do not provide tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. www.roccocarriero.com

Be the first to comment on this article. (Just fill out the form below)

Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
* Comments will be reviewed and posted in a timely fashion
* All fields are required
Please type the word 'water'
(For spam prevention, thanks)
East End Tick Control
The East End's only New York State licensed dedicated tick and mosquito control specialists!

Southampton Masonry-Visiting the Southampton or the Wainscott locations is an exciting experience.
Southampton Masonry has been serving Long Island's masonry and tile needs since 1975. Delivering quality products from Manhattan to Montauk for over three decades. The company's continued success is due primarily to their number one priority: customer satisfaction, with a promise of prompt and courteous service from the professional, knowledgeable staff. Southampton Masonry has the largest inventory on the east end. As direct importers they can offer a large variety of the finest quality products at the most competitive pricing for both your interior and exterior projects.

Aimee Fitzpatrick Martin, Licensed Associate Real Estate Broker
Considered a West of the Shinnecock Canal expert with a 5-star Zillow ranking, Aimee specializes in the luxury and waterfront markets in Quogue, Westhampton Beach, Remsenburg, East Quogue and Hampton Bays. With exceptional communication skills and a buttoned-up approach to every deal, she is highly skilled in the art of the negotiation process. Understanding the nuances of buying and selling waterfront homes, especially on Dune Road, is a specialty.

The Citarella Standard. We’re passionate about sourcing and selling the world’s best seafood. When you order our fresh seafood online, what you receive always reflects the unrivaled standard of our markets. It’s hand-prepared, never frozen, and shipped overnight. 631-283-6600.