After a year of little movement in 2015, the global stock markets saw volatility return to the markets in January. For much of the past year, we have been discussing our thoughts that the market was overvalued so while this may not come as a big surprise to many of you, it can be disconcerting to see volatility in markets and sudden drops in account values after a long period of steady growth and low volatility.
We were speaking with an investment company a few months ago and I heard a great statement. "Investments are a lot like a bar of soap. The more you touch them, the smaller they get."
When we see the value of our investments drop significantly over a short period of time, the natural reaction can be to think that an investment must be sold, or there's a buying opportunity, or any sort of action to feel that you are being proactive and in control of your assets.
This is a good time to remember that any investment should be made based on a long term plan and careful assessment of whether the expected long term return and risk of that investment matches the objectives for which the plan was created. If you have a plan, and your investments are performing as you originally assumed, the daily, weekly, monthly, or even yearly fluctuations up and down should not precipitate the need for a change.
While the past few years have been relatively calm, it appears that 2016 may bring a new wave of volatility to the markets. As always, if the recent moves in the market have you concerned and you would like to please speak to one of us about your investments, we are always here and happy to review your accounts with you.