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© 2020 Brickley Wealth Management
2020 has been one of the most challenging and confusing years on record for investors. The swiftest market decline in history was followed by an abrupt, about-face recovery.
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Check Your Emotions At The Door

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2020 has been one of the most challenging and confusing years on record for investors. The swiftest market decline in history was followed by an abrupt, about-face recovery. This turbulent cycle has been emotionally taxing for investors new and old alike. While it would be easy to succumb to panic as markets declined, or give in to speculation as markets climbed to new highs, our advice has remained consistent and unwavering: don’t let your emotions dictate your investments.

AN EVEN-KEELED APPROACH

We’ve long professed that short-term market movements, whether positive or negative, have no place in dictating an overall investment strategy. Wealth creation and preservation requires a commitment to disconnecting your short-term emotions from your long-term investment dollars. More often than not, emotions will peak or plummet at points of extremes and lead to an unfavorable decision making process.

A-Market-Cycle-of-Emotions-chart3.png

As markets decline, and fear and panic sets in, investors will be tempted to deviate from their well thought out investment plan and favor selling stocks for the safety and predictability of cash. Investors do this not because they believe it is the prudent and wise approach to investing, but because they panic and let their emotions take over.

As markets recover and inevitably begin to reach new highs, euphoria sets in. Investors may once again be tempted to deviate from their well thought out investment plan, but this time in favor of a more aggressive investment approach involving speculating on “hot” stocks or day trading.

2020 has been unique because both instances have been on display. No matter the scenario, deviating from your diversified and well thought out investment approach usually results in an expensive lesson learned.

The US stock market over the past 12 months.
The US stock market over the past 12 months.

COURAGE TO STAY THE COURSE

  1. A balanced, diversified portfolio is built to weather tough markets.
  2. Markets tend to continually “climb a wall of worry.” There will always be something to be concerned about. COVID-19, a slow economic recovery, income inequality, and an increasing global debt are a few of today’s concerns.
  3. No two market downturns are ever alike and future downturns will look different than prior ones. This shouldn’t lead us to think that markets will be incapable of recovery when they inevitably decline again.
  4. Your resiliency to market declines is precisely what provides you with a return on your invested money.

We hope that you and your family are healthy and staying safe. As always, thank you for your continued trust and confidence.

–––

Brickley Wealth Management is a Registered Investment Adviser*. Advisory services are only offered to clients or prospective clients where Brickley Wealth Management and its representatives are properly licensed or exempt from licensure. The information throughout this website is solely for informational purposes. The content is developed from sources believed to provide accurate information, and we conduct reasonable due diligence review however, the information contained throughout this website is subject to change without notice and is not free from error. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Readers should conduct their own review and exercise judgment prior to investing and should carefully consider their own investment objectives and not rely on any post, chart, graph or marketing piece to make a decision. No investment or tax advice may be rendered by Brickley Wealth Management or Brickley & Company unless a client service agreement is in place. We are not providing any personalized investment advice through this website. Please consult your investment, tax, or legal advisor for assistance regarding your individual situation. Brickley Wealth Management does not provide legal advice, and nothing in this website shall be construed as legal advice. For more information on our firm and our advisers, please see the latest Form ADV and Part 2 Brochures and our Client Relationship Summary https://adviserinfo.sec.gov/firm/summary/287487. For a copy of our Privacy Notice, please go here.

*Please note that the term "registered investment adviser" and description of our firm and/or our associates as "registered" does not imply a certain level of skill or training.

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Key Financial Terms 
Related to this Post:

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Diversification

Spreading investments across different assets to reduce risk.
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Portfolio

A collection of financial assets. This can include stocks, bonds, mutual funds, exchange-traded funds (EFTs), real estate, and other types of investments.
This is some text inside of a div block.

Rebalance

Adjusting an investment portfolio to realign with the portfolio’s intended allocation.
This is some text inside of a div block.

Risk Tolerance

An individual's willingness to take on financial risk in pursuit of investment returns. Influences asset allocation decisions, and may change from time to time.
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Stocks

Represent ownership in a company. Investors may profit from capital gains and dividends.

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Contact@brickleywealth.com
(650) 638-0111

Brickley Wealth Management is a Registered Investment Adviser*. Advisory services are only offered to clients or prospective clients where Brickley Wealth Management and its representatives are properly licensed or exempt from licensure. The information throughout this website is solely for informational purposes. The content is developed from sources believed to provide accurate information, and we conduct reasonable due diligence review however, the information contained throughout this website is subject to change without notice and is not free from error. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Readers should conduct their own review and exercise judgment prior to investing and should carefully consider their own investment objectives and not rely on any post, chart, graph or marketing piece to make a decision. No investment or tax advice may be rendered by Brickley Wealth Management or Brickley & Company unless a client service agreement is in place. We are not providing any personalized investment advice through this website. Please consult your investment, tax, or legal advisor for assistance regarding your individual situation. Brickley Wealth Management does not provide legal advice, and nothing in this website shall be construed as legal advice. For more information on our firm and our advisers, please see the latest Form ADV and Part 2 Brochures and our Client Relationship Summary https://adviserinfo.sec.gov/firm/summary/287487. For a copy of our Privacy Notice, please go here.

*Please note that the term "registered investment adviser" and description of our firm and/or our associates as "registered" does not imply a certain level of skill or training.

2020 Brickley Wealth Management. All rights reserved.
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