If you weren’t a long-term investor in January, you are now!  I had this post planned since then.  I thought May/June would be as good a time as any to discuss how you can thoughtfully review your portfolio. Back then I did not know we would be in bear market territory, which makes this even more timely.  Some stats on bear markets:

• Stocks lose 36% on average in a bear market. By contrast, stocks gain 114% on average during a bull market.
• There have been 26 bear markets in the SP 500 since 1928. There have also been 27 bull markets during that time. The magnitude of the bull markets meaningfully outweighs the bears.
• The average length of a bear market is 289 days or 9.6 months. The average length of a bull market is 991 days or 2.7 years.
• On average bear markets happen every 3.6 years.

SOURCE: HARTFORDFUNDS.COM

Bear markets reveal who is speculating and who has a plan.  Those that have a plan aren’t happy their portfolios are down but they are confident they (and their portfolios) will persevere.  Bear markets help prove that, within the discipline of investing, temperament is more important than intellect and process is more important than any short-term outcome.  Nick Murray has a great take on bear markets:

“a bear market is a period of time during which common stocks are returned to their rightful owners.  That is, stocks that were bid away from good investors by bad investors during euphoric times are, during major market declines, sold back by the flapper to the wise and deserving investor at fire-sale prices. And it underlines a great behavioral truth; the wise investor surges enthusiastically forward to take advantage of falling prices, even as the flapper flees from them in terror.”

How long will this temporary interruption last? I don’t know.  If I did I can assure you that I would not be writing a blog post.  What I am confident in is that investors with a proper plan should not be concerned with participating in the next 10% to 50% decline, but concerned with making sure they participate in the next 100% to 200% advance, whenever that is.

Now on to some thoughts about portfolio reviews.

Perhaps you want to…

• Review the risk you are taking with your investments and want to consider adjusting your asset allocation;
• Contribute to or withdraw from an investment account; or
• Determine how best to take advantage of lower prices
• Understand why your portfolio is performing the way it is

Whatever the case may be, there is no time like the present to review your portfolio to ensure your strategy continues to align with your needs and goals.

Careful investment planning is essential but can be complex. Performance is just one consideration when reviewing your portfolio. Factors such as diversification, taxation, and fees can have a dramatic impact on any economic climate.

To assist you in reviewing your investments, we have a checklist that outlines over 25 key considerations to guide your analysis. We hope you find it helpful!

Happy investing.

PS – if you found this interesting you may also like this blog: Why Focus on Investment Process over Investment Outcome?