Anyone invested in the markets through 2008 understands extreme volatility and the nervousness that tends to come along with it. Three years later, investors are still worried about volatility, but now more and more about experiencing a double dip recession.
It is often very valuable in times like this to take note of lessons learned from the past.
Three important lessons for today:
1) Communication with your Financial Advisor is essential.
Don’t be afraid to update your communication plan with your advisor. For example, if you talk once a quarter, then it may be time to go to monthly conversations.
2) Understand what you own and what factors cause your investments to go up or down.
This was a big problem in 2008 because most of the market became correlated to each other. Always know what positions you own across your entire portfolio and don’t be afraid to ask if you are unsure about something.
3) Be aware of the liquidity of your investments.
Never put yourself in a position where it is difficult to access money you may need in the short term. Be aware that certain types of investments may have lock up periods where it can be very challenging to access funds during times of increased volatility.
JPT090911-1402
