RDFA Release: Dealing with Market-Induced Worry

May 09, 2022

Quote of the Day from Warren Buffett:  "Remember that the stock market is a manic depressive."

The words from one of the greatest investors of all time ring very true these days.  In the past few years, we have gone from raging optimism, to the COVID-Crash, to a runaway bull market, and now to overt pessimism ruling the day.  If it feels like a roller coaster, it's because it has been.

First, we want to acknowledge that this part of the market behavior cycle is difficult to watch.  We live that emotion with our own money, and through that of our clients.  We understand it can be anxiety producing, and that it feels like you should be doing something.  Anything.  But much of what you should do has already been done.

For those in the retirement distribution years, we have made sure to have ample cash on the sidelines for any upcoming cash needs.  This practice can be hard to stomach when the market is going up and cash is earning very little, but it is times like this why we believe in this prudent approach.

For those still in accumulation years, now is the time to keep accumulating more shares at depressed prices.  These are not your prices, as you have no need to sell while things are down.  Remember that this is a long-term proposition, and we are positioning portfolios for multiple decades.

For us at RDFA, we work to control what we can.  We continue to review all of our holdings to see if any should be replaced.  We stay committed to a diversified, asset allocated approach to portfolio management, which includes rebalancing portfolios.  And we look for any potential tax-loss swaps to at least capture a tax benefit through these challenging times.  But most of all, we continue to focus on helping clients hit their long-term goals, which in times like this means focusing on fundamentals and not get caught up in emotion.

Quote of the Day #2 from Warren Buffett:  "So smile when you read a headline that says 'investors lose as market falls.'  Edit it in your mind to 'Disinvestors lose as market falls - but investors gain.'  Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other."

We are here to answer any questions that you may have, and to help you through this difficult time in the markets.  Don't hesitate to reach out to talk things through with us.