Last week the stock market continued its October rout as the S&P 500 neared a 10 percent correction from last month’s highs. How should we react to this bad news?
Steps to take after the recent stock market correction
Use this time of smooth and positive stock market returns to prepare for an eventual bear market.
Investing internationally might worry some US investors, but it can provide vital diversification in your portfolio.
Four steps if you are feeling nervous about the markets
1. Remember that Short Term Needs and Investing Do Not Mix.
2. Buy a Fixed-Income Ladder.
3. Stop Tracking the Market.
4. IF All Else Fails, Try Something Less Drastic.
The best approach to the Dow is to not react when it soars and when it declines. Your portfolio is much more than the Dow, and for the most part that’s a good thing.
The steps for a sound financial future remain remain in your hands. Remember the stock markets, over time, have a high likelihood of appreciation, regardless of your opinion of the president.
Even if the outcome of this election proves to be a crisis in your mind, don’t automatically conclude that it will be of similar import to your portfolio and long-term financial goals.
You want to settle upon a target investment allocation that under dire circumstances you would not abandon. All of the formulaic approaches may be pointing toward 70 percent in equities, but it’s not the right answer if that level of risk in a very poor market would cause you to sell. That one poor decision could delay retirement by years.