Market News Weekly Market Commentary

Is your risk tolerance taking this market into account?

Written by: Benjamin Bimson CIMA® / CIO, BCJ Financial Group

The market calmed quite a bit over the course of May. This calming doesn’t withdrawal market risk, it simply shows that we are witnessing daily geopolitical changes along with the most intense part of the upcoming midterm elections.

There has been some chatter about whether not the correction that began at the end of January is coming to an end. My answer is a very unsatisfactory one: Maybe and maybe not.

I don’t really have to look too far back to understand that corrections aren’t over until new highs are logged. We also know that markets can appear to recover and then go for a round two. Remember the fall of 2015 and early 2016? Here is how that played out on the price chart for the S&P 500. Near the end of 2015, it felt like the worst was behind us, then boom! Down we went until February 2016.

 

Chart Source: BCJ Financial Group

 

Certainly, after the correction ended in late February 2016, we entered a nice period of stock market gains.

Now we are in a correction again. Whether or not this will play out like 2015/2016, we have yet to discover. The only thing we can say for certain is that we are still in a correction.

What to keep an out eye for? Signs that it is abating and signs of encouragement. The current price pattern is showing that we are about right in the middle between the high in January, the low we hit in February, and the re-tests in March and April. We have broken a general trend of each test resulting in a lower bounce up. That is a good sign, but not conclusive yet.

 

Chart Source: BCJ Financial Group

 

Take a step back and look at your portfolio risk tolerance. Would you be more disappointed if you are too conservative and the market has seen the lows of 2018? Or would you be more disappointed if you were too aggressive, and should have been more conservative because the low of 2018 is yet to be realized?

Honesty with oneself is the key to success in this market. If you try and let outside pressure choose your strategy and risk tolerance, there is a higher chance you could start making emotional decisions when it comes to your investments.

In the meantime, while we wait patiently for the market to reveal the next hand, focusing on family, educational goals met (i.e. graduations from various levels in school) and summer vacation can be a very welcome respite!

 

View More Articles

Learn More About BCJ Financial Group

Visit BCJFinancial.com

Contact Us

 

Advisor-Insights


 

Securities offered through World Equity Group, Inc., member FINRA and SIPC, a Registered Investment Adviser

Investment Advisory Services offered through BCJ Capital Management.

BCJ Capital Management and DBA name are not owned or controlled by World Equity Group, Inc.

Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. BCJ FG 18-89

You Might Also Like