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Markets Prove Resilient

March 17, 2020
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As the current market conditions remain uncertain, we are reminded that history has proven the best long-term strategy is to stay the course. We know that this is not always easy, however understand how important it is to do in times like these. Our investment philosophy is now and always has been, time segmentation of assets. We accomplish this through the utilization of the bucket strategy. This strategy is designed to allocate portions of our assets into 'buckets' based on when we need to generate income off investments. Those buckets are allocated into certain time periods: now, short-term, long-term, and possibly never. Funds needed now and in the short-term have a higher allocation to cash or conservative investments, such as money markets, fixed income securities and bonds. Funds needed for the long-term have a more growth oriented approach, investing more heavily in equities.  Most importantly, though, we are here to help manage expectations and behaviors when markets do make us nervous and create uncertainty. 

As shown in the figure below, markets have been quite resilient in times of economic decline and uncertainty. Although we are uncertain as to how long this period might last, we do know based on historical data that the average bear market has only lasted 1.3 years. The best way to move forward is to remain steadfast and remind ourselves that we plan for theses scenarios within our investment approach and have time on our side to whether short-term market movements.