Do recent stock and bond market losses have you questioning your asset allocation and investment strategy? 🤔 Ask yourself these five questions to see if you need to make a change: 👇

1. Are you feeling stressed😬? What percentage loss in the value of your portfolio would cause you to sell, no matter the valuation? Because stocks declined about 50% within a year during the financial crisis, limit your stock exposure such that you can tolerate a 50% decline in stocks without panic selling.

2. What are the maturities (and credit quality) of your bonds or bond funds? The longer the maturities (and lower the credit quality), the more the value of bonds will fall when interest rates rise.

3. How long will it be until you plan to spend the money you have invested? Do you have enough cash to cover your expenses for the next two years or will you have to sell investments (when it could be a bad time to do so)?

4. Is your portfolio performing as expected?

5. If you have professional management, is your manager providing clear information that you understand and makes sense to you?

The S&P 500 declined nearly 21% in the first half of 2022, the worst start to a year since 1962. Bonds provided little relief with the US investment grade bond index (AGG) falling about 11% during the same period. For bonds, that is the worst first half on record.

When the S&P 500 fell 21% in the first half of 1970, while inflation was also running hot, the market reversed those losses to gain 26.5% in the second half. So, the first half doesn’t necessarily mean the trend will continue.

Nevertheless, markets can change quickly on surprising news. As a result, it’s important that your portfolio is prepared to weather whatever storm may be ahead.

If you are considering the benefit of professional help to manage your investments, contact me at 201.266.6829.

Ben and Jeff in North Palm Beach, Florida