I wanted to remind you that we have proactively planned for market pullbacks such as the one we are experiencing right now and that no knee-jerk reactions are necessary.

 

Throughout last year as I would meet with clients I would acknowledge that the market has been doing well but my focus is always on how to protect your wealth when the market pulls back. The way we protect your money is by allocating a portion of the portfolio to fixed income. Fixed income helps us because it does not go down when equities fall, in fact fixed income does well when equities pull back since money that is flowing out of equities and ends up flowing into fixed assets (hence driving up their value).

 

In the Globe and Mail I read the following:

 

“But a massive fall in share prices prompted an about-turn, and on Tuesday, it (the 10-year US Treasuries yield) fell back to as low as 2.662 per cent.” (Stocks Crumble as global losses hit $4-trillion, Marc Jones, Feb 6 2018)

 

To translate that into English, the quote is explaining that stocks went down and bonds (10 year US government bonds) went up (since bond prices go up when bond yields go down).

 

Although it is not fun when we go through these pull backs I want you to know you have already planned for this and that no action is necessary.