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Financial Planning Prepares Your Portfolio for Bad Markets

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Financial Planning Prepares Your Portfolio for Bad Markets


Despite the S&P 500 having gained more than 32% since it’s lowest point back on March 23rd (we’re now down only about 12% from the all-time high), the news media continues to overhype the negative.

“Coronavirus Shock is Destroying Americans’ Retirement Dreams,” to name one from Bloomberg. “Even Retirees with Resources Find Coronavirus is Upending Their Financial Plans,” as seen in the Los Angeles Times.

The reality is that investors who have stayed the course have captured a remarkable recovery so far, mirroring the pattern the stock market has had through every single downturn in history. We could always see markets get worse from here but the key lesson remains that these things come and go. No one can predict them consistently. To try is to set yourself up for failure.

Another key lesson to take away is just how important planning is. Building a plan that recognizes the historical fact that the stock market has frequent, severe downturns and prepares the portfolio in advance avoids the need to react to bad markets.

Reactionary investment decisions are almost always wrong. In today’s video I talk about that aspect in a bit more detail.

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