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Your Bank > Education and Advice > CNB University

How are you 'Battling the Bear'?

M Schiller
Michael Schiller, CFP® is Vice President, Personal Banker and can be reached at MSchiller@CNBank.com or (585) 394-4260 x40133.

June 2009

In the past year, the market has experienced more volatility than it has in years. While this Market setback can be worrisome to most, it is important to remember that market declines and corrections are a natural part of the long term investment process, and should not affect your long-term financial plan. A financial plan isn’t just to make it to retirement for example, but to have the discipline in place to make sure those funds last as many years as needed. In order to do that, we have to:

  1. Stay Calm. Instead of reacting to the day-to-day "noise" of the media, and even friends and relatives, try to stay focused on your long-term goals. Remember that typically, your friends and family do not have the same goals, time horizons, and risk tolerances as you. Take the emotion out of investment decisions, and make sure to speak to your Personal Banker before taking any hasty steps.
  2. Take Another Look. This means two things: Are you invested according to your long-term risk tolerance, or did you invest too aggressively when things were good in the market? Many don’t realize they have invested outside their comfort zone until it is too late. Work with your Personal Banker to find out what that balance should be for you, in good times and in bad. Also, review your time horizon, which is the number of years you have until you start withdrawing your money. Realize that if your life has changed at all (did you retire, change/lose a job, get married/divorced, make a large purchase, have children/grandchildren) it is especially important to review what you own and how much. Is this balance still appropriate for you?
  3. Be Diversified. Once your time horizon, goals, and risk tolerances have been revisited, it is important to check if all of your asset allocation is maximized so that you may reach your desired goals. Stocks, Bonds, and Cash (and cash equivalents) all produce different results from year to year. Ideally, you should own a "mix" of different and multiple investments. If you try to chase the best performer, you will most times end up behind. Being diversified allows us to not be "chasers", but investors with a long-term focus on overall performance.
  4. Stay Invested. Don’t let your emotions interfere with your long-term strategy. Stay with the basic philosophy, "Buy Low, Sell High". If the recent market had you cash out and now watching from the sidelines, you just followed the opposite of this most basic principal. Cash can provide a sense of security, however if we are looking at long-term goals, over the past 83 years stocks and bonds outperformed cash 71 of the 83 years.* "Buy Low, Sell High", now is the time to not only remain invested but to keep contributing towards your goal. Avoid the guesswork of trying to time the market. By waiting for a better time to invest, you may be missing out on some potential opportunities.

There is no doubt we are living through some current uncertain times in the market. However it is equally true that any hasty short term decisions made now might well have a lasting negative effect on your ability to reach your long term goals. By staying the course and focusing on long-term goals, you can be well positioned to participate in a market recovery. As Optimum Customers, take advantage of the knowledge and services offered to you through your Personal Banking Team.

*American Funds, March 2009

Canandaigua National Bank & Trust has contracted with Online Brokerage Services, Inc., Member FINRA, SIPC, to provide brokerage services to the customers of Canandaigua National Bank & Trust. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Bank & Trust, and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested.