The Correction is Coming

Saving coins in jar

The Correction is Coming

The correction is coming, the correction is coming. Do I sound like Paul Revere announcing the British?

Well, yes, that’s my intention. I wrote a similar missive six years ago.

I’m still saying the same thing:

– Stay diversified
– Have enough cash on hand to wait out 2 to 3 years of a down market
– Buy low, or lower as the markets go down if you have extra cash
– Don’t pay too much attention to day-to-day movements
– Look to rebalance two to four times a year. The calendar is not sacred, but percentages should be.

I have often remembered and repeated Warren Buffet’s advice: “Be fearful when others are greedy, and be greedy when others are fearful.”The last big downturn 2008-to early 2009 gave me the opportunity to put this strategy into action. My partner, now boss, Anna will attest, I was buying on really bad days. It served me well.

In 2013 I cut back my asset allocation from 90/10 stocks to bonds to a more realistic 60/40 and seven years later my allocation is 50/50. I also have about two years of cash on hand for down market investing or spending without touching investment monies. It’s all drama. That’s my summary of day-to-day financial news. The bolder or more dramatic the headline, or the scrolling BREAKING NEWS tag running across the screen, the more I want to turn off the TV, Twitter, Facebook, the computer, or fold up the newspaper and magazine and throw them away.

Six months to a year later it is usually no big deal. So why this post? I want my family, friends, clients, prospects and other allied advisors to be prepared. You’re the reason I’m doing this.

– Don’t get caught up in the day-to-day dramatic news.
– Get out that checklist on an annual basis to cover all your bases (If you don’t know what they are, or don’t have a checklist, email me)
– Reaffirm your life priorities, not just your financial goals
– Enjoy your family and friends. It’s never too late to stay in touch if its 6 feet or more.

This article originally appeared in my blog, AdviceOnlyMusings in August 2014

Jim Ludwick
Jim Ludwick

Jim Ludwick is the founder of MainStreet Financial Planning. His varied education and life experiences have enabled him to apply his knowledge and experience into useful solutions for personal financial problems. His writing and broadcasting activities allow him to help many more than just individual clients. He loves a microphone.

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