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February 24, 2022

Your Knee-Jerk Reaction is Maybe Wrong

It’s rare that market action provides such clarity of purpose to our recommendations that investors maintain a long-term orientation with investment plans, even as they regularly revisit their tolerance for market risk. After Russia launched an invasion of Ukraine in their early morning hours today, international markets opened to significant losses. Domestic stocks opened down as much as 2.5%. But by market close, U.S. stocks had regained every bit of ground lost today…and even some of prior day’s drop. The stark change of fortune offers a fine reminder to investors wary of market tumult:

  • Amidst market declines, the time to gauge tolerance for various levels of investment risk may have passed
  • Sales of risky assets after substantial loss may do little more than lock in losses already experienced
  • Investors should regularly revisit comfort with potential market risk in order to increase the likelihood of adhering to long-term investment plans when the inevitable market decline arrives
20220224 SAM Market Update

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