BY MIKE MCGILVARY, FINANCIAL ADVISOR
Since entering the financial services industry, I have worked with an array of investors who have different personalities. Many investors, especially those newer to the markets, have not encountered a stock market pullback until recently. Unfortunately, these newer investors tend to focus on the negatives of market volatility. These investors could be focusing on the positives and the opportunities created during times of volatility.
One may ask, “What opportunities are you referring to?” For starters, pullbacks can create an opportunity to purchase publicly traded companies or other variable investments at a lower price than they may have been trading at in recent months or years. At Marzano Capital Group, our team of financial professionals focuses on the long-term success of our clients, and we believe investors that do not make investment decisions based off of emotion have fared better during market pullbacks than those investors who let emotions dictate their investment decisions. More simply put, market pullbacks can create attractive buying opportunities for investors who are focused on their long-term goals, and working with a financial advisor or a team of financial professionals may help investors identify those goals, stay focused on the long-term and not lose sight of their finish line.
If you, as an investor, feel your portfolio is on a rollercoaster ride, it may be an appropriate time to review your overall risk tolerance. Your financial professional may be utilizing a risk tolerance tool or questionnaire to assess risk. At Marzano Capital Group, we feel it is appropriate to address this subject with each one of our clients. We have a tool in place that we believe gives us an appropriate illustration of one’s tolerance for portfolio fluctuation. As a core principle, we feel it is very important that your investment portfolio is built based on your goals and factors in your risk tolerance.
Another concept investors may have heard their tax advisor or financial professional discuss with them during times of market pullback is tax-loss harvesting. What is tax-loss harvesting? This is a technique that should be discussed with your tax professional, but simply put, tax-loss harvesting is the process of selling investments in your non-retirement brokerage accounts at a loss to possibly offset realized investment gains you may have captured over the course of the year in other investments. Again, we cannot stress enough – this should be discussed with your appropriate tax professionals. Market volatility can certainly create these opportunities from time to time depending on what you own in your non-IRA investment accounts.
As investment professionals, we feel it is important for investors and clients to feel empowered during times of market volatility. This is sometimes easier said than done but, in our opinion, having regular contact with your financial advisor(s) and having investment portfolios that align with your long-term financial goals, is by far the best strategy. Keep in mind there are opportunities that can be created during times of market volatility. Having a conversation with an investment professional may help you stay the course through the ups and downs of the ever-changing investment world.