Everybody Has a Plan…

The full quotation, attributed to Mike Tyson is, “everybody has a plan until they get punched in the mouth.”  While Mr. Tyson was obviously talking about boxing, the same concept is probably equally relevant to investing.  A sudden and sharp correction in the stock market, can feel like kick in the stomach.

Most investors start out with a rational, long term strategy that is designed to reflect the investor’s financial position and long term financial goals.  Most people are comfortable with their long term plan, until the markets experience a reversal.

Like a boxer that doesn’t throw in the towel after the first punch, investors should look at a market correction as an opportunity to review their long term strategy with their advisor(s) and determine if circumstances have changed enough to warrant a modification in the long term plan.

Until a few weeks ago, the S&P 500 had gone nearly two years without a material pull back.  This is not the norm.  According to data going back more than 30 years, in a typical year, the stock market experiences a correction of about 10 percent.

What we are experiencing now is a return to normal market behavior, which has never followed a straight line.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA