Will the Slow Growth Bumpy Ride Continue?

Deep research helps keep your financial plan on track

We wanted to briefly address the current investment environment, which is characterized by unspectacular returns and increasing volatility. At One Degree Advisors, we study numerous economists and money managers with deep research teams. Interestingly, the current environment is one in which we are noticing a fairly strong consensus of opinions. In a letter by Ray Dalio of Bridgewater, he sums up these opinions:

It is understandable that investors are concerned about how to invest in the current environment. All assets look expensive, central banks are dangerously short on ammunition, and the global economic risks are rising. Cash is one alternative, but has terrible returns and central banks who control its quantity are trying to make it even worse. Unbalanced portfolios are another alternative, but imply the investor knows in this environment which assets will be best, and we would certainly be humble about the degree to which we could know. The other option is a diversified portfolio of assets.

We do not love any of these choices, but we cannot make them something they are not.

Dalio also says, to which we agree:

There is no better way to reliably meet your return target than holding a diversified portfolio of assets that is geared to meet your objectives.

This is how we believe you may want to attack a “slow growth, bumpy ride” market:

  • If you are in the “accumulation” stage, keep investing and adding shares before the next growth cycle.
  • If you are in the “income” stage, keep withdrawals at sustainable levels.
  • Focus on your financial plan. Many were surprised even during the downturn of 2008 at the resiliency of their financial plans.
  • Stay patient. Volatility and uneven growth are not bad things because they can provide opportunity for good investment managers. It can take time, however, to see the benefits.
  • Communicate with us: your priorities, questions, ideas.

It’s important to remember, the consensus opinion doesn’t always prevail. Only time will tell, but it’s good to be prepared.

Talk with us about your portfolio or financial plan here: Talk with an advisor

More Reading: Practically Speaking — Wealth Health

Diversification does not guarantee a profit or protection from losses in a declining market.

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