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Staying Focused in Turbulent Times 

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By Richard Bloom

Richard Bloom

While today’s markets can be nerve racking for even the most experienced investors, those who approach it with a long-term plan in place have a much greater chance of protecting themselves from mistakes and seizing the opportunities that lay ahead. The best way to take advantage is to create a goals-based approach to wealth management using a disciplined four-step process. The first–and often the most important–step is discovery, an honest, open conversation about your goals and your entire financial picture. In the second step, your Financial Advisor works with you to assess various scenarios and advise on appropriate strategies designed to help you meet your goals. Your plan should safeguard your short term needs while strategically positioning you to ensure your long term goals will be met. Once you have agreed on a personalized wealth strategy, your Financial Advisor advises how to implement in the most efficient way.  Finally, as time progresses, your Financial Advisor will regularly review your financial situation with you, making adjustments according to your needs, life events and changing market conditions.

In addition to taking a goals-based approach, below are some further tips on how to navigate through this unpredictable period.

When the market is volatile, almost everyone thinks about their financial future and the potential impact such fluctuations may have on their retirement accounts. However, it is during these turbulent times that it’s important to remember certain basic, time-tested principles of investing.

Continue Contributions

It may not seem intuitive, but continuing to contribute to your retirement plan–even during market downturns–can potentially enhance your returns over the long-run. A down market can be an opportunity for you to acquire more shares of your investments at a lower price. Consistent investing through market ups and downs is called “dollar-cost averaging.” If an investment’s price is high, you buy fewer shares, or units. When prices are low, you buy more. Investing regularly, using dollar-cost averaging, can help reduce the risk associated with buying during big swings in market prices.

Diversify

If you’ve ever heard the saying, “Don’t put all your eggs in one basket,” then you already have a basic understanding of diversification. Diversifying your portfolio can reduce risk and volatility. Review your account and make sure your portfolio is not too heavily weighted in company stock, or in any single asset class.

Stay Invested

You may be anxious about the decrease in the value of your investments. But don’t be tempted to move out of the market, sit on the sidelines and wait for prices to rebound. Trying to time the market could potentially jeopardize your financial strategy–and your future goals.

Maintain a Long-Term Focus

Any investment decisions you make should be based on your financial goals and objectives, time horizon and risk tolerance, rather than concerns about market volatility. Even if the market seems volatile, remember that ups and downs are normal. It is important to stay focused on your financial future and refrain from making short-term decisions on long-term investments.

History demonstrates that there will always be some degree of uncertainty and volatility in the markets. While market events are out of our control, we do have control over our financial objectives and how our investments are allocated to help us achieve them. If you would like assistance in determining the mix of asset classes that can help you meet your financial objectives, contact your Morgan Stanley Financial Advisor.

Disclosures:

Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.

Richard Bloom is a Financial Advisor in 1290 Avenue of the Americas, New York, NY 10104 at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at Richard.Bloom@morganstanley.com or by telephone at (212) 893-7597. His website is https://advisor.morganstanley.com/the-mayergelwarg-group.

This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be appropriate or all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Asset allocation and diversification do not guarantee a profit or protect against loss. Any type of continuous or periodic investment plan does not assure a profit and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of fluctuating price levels of such securities, the investor should consider his financial ability to continue his purchases through periods of low price levels.

This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be appropriate for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at www.morganstanley.com/disclosures/dol. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

Richard Bloom may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation, in states where he is registered or excluded or exempted from registration, http://www.morganstanleyfa.com/mayergelwarggroup.

© 2020 Morgan Stanley Smith Barney LLC. Member SIPC.

CRC 2992110   03/2020     

You Can’t Time the Market

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By Richard Bloom

Why You Should Avoid Practicing Market Timing

There are many things that could affect the overall equity market and any individual stocks you may own—from economic trends to geopolitical events like an election. What is certain is that the market will always have its peaks and dips.

This market cycle can make it tempting for investors to attempt to buy and sell stocks at particular times to maximize gains and avoid down periods. This investment strategy is known as market timing, the practice of moving in and out of the market based on predicting when the market will shift.1

Missing out on Market Moves

Although the idea of market timing can be tempting, it is also extremely difficult for most investors to predict the future of the market. In fact, those who try to time the market may actually underperform investors who simply buy and hold stocks.2

One reason is the tendency of the market to experience big upswings and downswings on adjacent days during periods of market volatility. That means an investor who sells after a substantial down day for the market may miss a subsequent period of gains. Also, many investors let emotions dictate their actions, leading them to buy stocks when the market has already gained in value, only to sell when the market has declined, leading to sluggish returns. Moreover, even with sophisticated tools to analyze the factors affecting stock prices, it is very difficult to forecast future stock market movements.

Also, missing out on just some days in a market cycle can drag down returns considerably. The S&P 500 generated an annualized return of 9.6% between 1990 to 2018 for investors who were invested during that entire period. Investors who missed just the 15 best days during that period only enjoyed returns of 3.6%, and investors who missed the best 90 days actually suffered an annualized loss of 3.5%.3

Market Timing Can Carry Costs

Along with possibly missing out on market gains, market timing can have other penalties. The transaction costs from buying and selling stocks can add up and drag down overall returns. In addition, investors who do sell stocks for a gain will likely trigger capital gains taxes, again reducing their overall profit.1

Creating and staying with a financial strategy can help you avoid making rash moves in response to what’s happening in the market. A Financial Advisor can help you tailor a framework that’s set against your long-term goals and considers key aspects of your financial life, from your age and aspirations to current market opportunities. While market conditions may vary, a personalized, adaptable wealth strategy that’s centered around your life goals should remain a constant as you build your wealth and plan for your future.

FOOTNOTES

1 – https://www.investopedia.com/terms/m/markettiming.asp
2 – https://www.forbes.com/sites/simonmoore/2016/03/07/the-myth-of-market-timing/#53448611461e
3 – Morgan Stanley Client Conversations & Primers, Intro to Investing PDF – Market Timing Is a Flawed and Costly Strategy Charts

DISCLOSURES

Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.

Richard Bloom is a Financial Advisor in 1290 Avenue of the Americas, New York, NY 10104 at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at Richard.Bloom@morganstanley.com or by telephone at (212) 893-7597.

This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”) and its Financial Advisors and Private Wealth Advisors do not provide any tax/legal advice. Consult your own tax/legal advisor before making any tax or legal-related investment decisions.

Richard Bloom may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation, in states where he is registered or excluded or exempted from registration, http://brokercheck.finra.org/Search/Search.aspx.

© 2018 Morgan Stanley Smith Barney LLC. Member SIPC. CRC 2297755 11/2018