Last week, the markets experienced some of the biggest price swings in history, and though stocks did manage to finish in positive territory, there’s no denying that the long-term uptrend of the past few years now has been broken.
The recent action in stocks should give you a big reason to pause, and to reflect on where your money is right now.
More importantly, you should now be keenly aware of how much risk you have in your portfolio, and how susceptible you are to a major market correction. Have you reduced risk yet?
If you haven’t reduced risk, then when do you plan to reduce risk?
Risk out there is booming from unknowns such as:
• The severity of the China slowdown and its pull on the global economy
• The unknown on Fed policy and when an interest rate hike is going to hit
• The massive mispricing of many ETFs during last week’s “mini flash crash”
Individually, these risky unknowns should be enough to cause you to consider reducing risk in your portfolio.
Collectively, these risks represent an unholy trinity of potential portfolio damage.
In the podcast I just recorded on Friday, August 28, I talked about the need to reduce risk in the face of the current trifecta of unknowns.
I also provided my thoughts on what you can do if you are struggling with decisions such as when to reduce risk, how to reduce risk—and more importantly, when it will be safe to buy back into this market.
As I’ve said to many of my clients, radio and podcast listeners, and to subscribers of my various newsletters, now is the time to reduce risk.