Back in July, we wrote that "we trim sails to take what the market gives us." At that time, it was giving us money market and CD rates that were better than the declining inflation rate. That was a good thing. It's still giving us that.
It's also giving us a shot of Fear. We see this by observing the Fear & Greed Index from CNN. Today, it looks like this:
We've been here before. Like almost exactly a year ago! Does anyone remember whatever the terrible news of that moment was? Probably not. Now, a year later, globally diversified, balanced portfolios are 8%-12% higher. The tech heavy NASDAQ is an outlier at +36%.
We like to say that we "buy fear" and "sell greed." Just don't conclude that we're market timers. Our core, evidence-based strategy, is to choose an asset allocation target and stay that course.
But there are moments when market conditions give us an opportunity to "trim our sails." This is one of those moments. Here are some things you might do:
- Nothing! This is actually the starting point. Long ago, Jack Bogle, founder of Vanguard, said, "Don't just do something, sit there." The first question to ask is, "What problem or situation needs fixing?" And, "What are some ways to do that?"
- One situation is that there's too much cash sitting around still earning practically nothing. Consider re-allocating it to stocks, or even to a money market fund or CD. Do this while still respecting your asset allocation target.
- Maybe you still need to take an RMD for 2023? Deferring that until November or December could give you more assets to withdraw from.
- If you're thinking about making your employer savings plan (401k, 403b) contributions more aggressive, now is likely to be a good time to do that. It's OK to leave the existing balance as is.
- No matter where you are in life's journey, there are almost always opportune moments. Could this be one for you?
Contact us to have a talk about what's most important to you.
James Cosgrove, CFP, Plano, TX jim.cosgrove@verizon.net 972-489-0262
Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315
Evidence-based. Rules-driven. Policy-focused.
Disclaimer!!! These comments are general and for information only. They are not specific to your situation, nor are they an offer or solicitation to buy or sell any securities. Past performance is not a guarantee of future performance.
