Implications of Monday’s Market Decline
Stock markets closed sharply lower on Monday. While many investors scramble to manage losses, those with a solid financial plan and a diversified portfolio need not worry. Monday’s market declines highlight the reality that markets do fluctuate and thus, the importance of a strategic financial plan. Short-term market news should not dictate long-term investment strategy.
The truth is that markets do not always go up, so it is perfectly natural and expected for markets to decline occasionally. In developing and maintaining investment portfolios for our clients, we at ACap Asset Management plan for down-markets as well. Not only do we protect against downturns through strategic portfolio design and diversification, but we also capitalize on down days as buying opportunities for you. While all of our investments are liquid, we purchase intending to hold for at least 5 years. Investing with a shorter timeframe does not always allow for the markets to react and recover to the current world headlines.
The biggest long-term risk is not daily volatility, but rather, inflation. Inflation is the declining purchasing power of your cash while it sits uninvested in a bank account. Unless your cash is earmarked for a specific short-term need warranting the need for cash, inflation will have a far more negative impact on your wealth than market volatility.
No one can predict the future, but we are confident that the only way to beat inflation in the long-term (5 plus years) is through owning equities (stocks).
If you have any questions regarding your accounts and portfolio or would like to schedule an initial consultation, contact ACap at email@example.com.