The past two years has redefined market volatility and given every investor the opportunity to reassess their personal definition of risk tolerance.  Each independent registered investment advisor we work with is required to discuss risk tolerance with their client and complete a risk tolerance questionnaire.  This is the foundation of the investment process, and if done in an honest and forthright manner, will set the stage for long term investment success.

The S&P 500 fell 7.98% in May and June is following suit.  Our incoming e-mails and telephone calls have increased as clients and advisers worry about the market and their portfolios.  Showing some concern and respect for the market is a good thing, but any emotional rush to judgement tells me there is a problem with the foundation: the investment plan not in sync with the person’s risk tolerance.  Monies invested in the equity or bond market are going to flucuate in value, but these monies should be invested with a long-term time horizon.  Time has taught us that markets are resilient and if investors can set realistic expectations while maintaining a long-term prospective they will position themselves to take advantage of the long-term potential of the markets.

This entry was posted on Tuesday, June 8th, 2010 at 2:56 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.