We don't believe in "market timing".
In fact, one of our favorite quotes regarding how investors should weather difficult stock markets is credited to the late, great Sir Jack Bogle -- Founder of The Vanguard Funds. When asked what an investor should do in a volatile stock market, Bogle replied, "Don't just do something, sit there!". We agree. However, we can't be blind to the various and growing concerns facing the market today: trade wars, yield curve inversion, etc. At Sovereign, our #1 tool for managing volatility is proper planning. Specifically, we take great care to understand our clients' cash flow needs. Then, we structure their investment portfolios to meet those needs over the short, intermediate and long term. By doing this... we can help "firewall" and protect funds needed in the short term while allowing us to follow Jack Bogle's advice and let funds needed in the long term to remain exposed to the stock market. Since stock market volatility dissipates over time, this process of segregating short and long term funds helps us make sure that funds needed in the short term are immune to the stock market swings since those funds will be out of the market. Conversely, our clients' long term funds can remain invested, weather the storms and deliver the long term potential only found in the stock market.
Here're a couple of videos worth watching...
This first one is from today's "market expert" panel on CNBC. They're all sharing what they fear in the market today.
Top strategist says correction here and investors should brace for more volatility from CNBC.
This second video is a "classic" from the archives. It's Jack Bogle expounding his philosophy of how to be a successful long term investor:
Jack Bogle, in his last CNBC interview, on why timing markets never works from CNBC.
For us... we agree with the sentiments in both videos...
We're concerned about the various challenges facing the market today and in the short term. And, we remain comfortable that over the long term, the markets will continue on and thrive. The key, of course, is to do the work needed to be sure one's asset allocation matches their time horizon and cash flow needs.