It has been one heck of a ride in US stocks since the “Covid Crash” lows. The S&P 500 index* is up just shy of 100% since March 23rd 2020. In 2021, the S&P 500 continues to rise and has yet to sell off more than 5% at any point – offering a very smooth ride for investors.
Its times like these when I think it’s really important to look back and remember the price we paid to get on this fantastic “ride” in the first place – let’s call it the “price of admission”. For long term investors the price of admission for today’s amazing returns was maintaining their asset allocation through the “Covid Crash” without panicking.
Long term investors who sat with their portfolios through all the losses and scary headlines were well rewarded for their patience. The S&P 500 quickly regained all of the Covid losses and then continued to make new highs in 2021. You paid your price of admission, now you get to enjoy the ride! Congrats!
All of that is history of course – it tells us nothing about what is going to happen to markets in the future. Will the ride keep going? For how long? Or will it end abruptly? If it’s going to end, then when? This week? Next year? No one knows for sure. But what we do know is that long term investors will have to pay the price of admission for the next ride at some point.
Now is a great time to prepare for the price of admission for the next ride. Can your portfolio withstand a 30% selloff in global stocks? Are you overweight risk assets compared to your target allocation now that stocks have run so far so fast? Has your risk tolerance changed now that you are a few years closer to retirement? These are great questions to be asking yourself and your advisor today while the ride is still going. These are not questions you want to be asking when stocks are down 30% from their highs.
Enjoy the ride – prepare for the next one.
Charles Brown is a CERTIFIED FIANNCIAL PLANNER™ and Financial Advisor at M. Brown Financial Advisors in Naperville, Illinois.
*The S&P 500 is an index. You can not invest directly in an index.
**The above article is informational in nature only and is not a recommendation to buy or sell securities. All information is gathered from sources believed to be reliable, but neither Charles Brown nor Ausdal Financial Partners, Inc guarantees the accuracy of the information. All investments carry a degree of risk. Individuals should consult with their tax and investment professionals before making changes to their investment portfolios.
***Securities and Advisory Services offered through Ausdal Financial Partners, Inc., an SEC registered investment adviser, member FINRA & SIPC. 5187 Utica Ridge Rd., Davenport IA 52807, 563-326-2064, www.ausdal.com. Sub-advisory services offered through M. Brown Financial Advisors, a registered investment adviser with the state of Illinois. M. Brown Financial Advisors is located at 2728 Forgue Drive, Suite 100, Naperville, IL 60564, 630-637-8600. M. Brown Financial Advisors and Ausdal Financial Partners are unaffiliated entities and only transact business in states where they are properly registered, or are excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission or any state regulators. Ausdal Financial Partners, Inc. does not accept buy, sell or cancel orders by email, or any instructions by e‐mail that would require your signature. Information contained in this communication is not considered an official record of your account and does not supersede normal trade confirmations or statements. Any information provided has been prepared from sources believed to be reliable but does not represent all available data necessary for making investment decisions and is for informational purposes only.