Given the recent spat of volatility and the talking heads on TV, investors are faced with a variety of emotions about their investment portfolios. This is the period when investors typically lose sight of the potential from remaining fully invested and fall into one of the behavioral biases that we have referenced in the past.
During periods of volatility we believe it is more effective to rely on your asset allocation, risk tolerance and your financial advisor for guidance. Below is a table from Dimensional Funds, where they surveyed over 19,000 clients and asked them how they measure the value of their advisor.
The survey results point to entrusting your financial advisors and leaning on them to help keep things in perspective during the tough times, as it is inevitable that fluctuations will happen over time. Everyone has a different type of risk appetite and if you get to the point where the fluctuations are too much to handle then consult with your advisor about reducing your risk tolerance.
