As you probably know, today was an ugly day for the stock market. Lately, we’ve seen a lot of volatility. However, to put today in perspective, there have been many down days like this, even over the past 18 months.
The present cause of this volatility is likely due to multiple factors. One is our escalating trade war with China and its impact on global economic growth. Next is the signal being sent by the bond market of a slowing economy, if not an outright a recession on the horizon.
These concerns are precisely why I’ve taken two steps in recent months – once in mid-May and again today – to lower your portfolio’s risk. And, as hoped, your portfolio’s volatility during down days has been less than the broader market.
As a general statement, your portfolio’s exposure to stocks sits at a little less than 60% of what it could be. The unallocated portion of your portfolio that’s earmarked for stocks – referred to as the dry-powder bucket – is mostly invested in short-term bond funds. Finally, the latest changes made to your bond portfolio aim to both lock in the positive returns you’ve experienced in bonds this year and to further reduce the risk of rising interest rates.
I’ll certainly keep you posted, if and when conditions change. If you have any questions, please feel free to contact me. I am happy to talk in person or on the phone.