BP 401(k) Model Allocations – Q2/2020

Attention BP Employees,

Capstone Wealth Advisors is pleased to announce the release of our Q2 2020 model allocations for your BP ESP. The first quarter of 2020 was turbulent to say the least. During the week of March 9th through 16th, the Dow Jones Industrial Average (DJIA) experienced several of the greatest percentage losses it has ever seen in its 124-year history. Then, between March 24th through 27th, the DJIA saw its best week since the 1930’s. This volatility has many individual investors wondering what to do, so we put together a short list containing a few simple tips you can use to help navigate these volatile markets.

Review your risk tolerance.
Markets like this emphasize why understanding your risk tolerance is so important. Some investors learn the hard way that they aren’t as willing to face a sharp drop in the value of their portfolios as they had assumed. Similarly, risk you took on years ago may no longer make sense given your current situation and life stage. An aggressive allocation has historically gained more over time, but at the price of greater volatility—which can be especially risky if you don’t have much time to recover. Market downturns sometimes can be a wake-up call to consider adjusting the level of risk in your portfolio.

If we haven’t already reviewed your risk score, to help you understand what your individual risk tolerance is, we encourage you to use our free risk assessment tool where you can understand what risk level is most appropriate for you and your investments.

Click Here for Your Free Risk Tolerance Assessment

Resisting the urge to sell based solely on recent market movements.
When markets are volatile, many investors get spooked and question their investment strategies. Selling out after a market drop can make temporary losses become permanent. Staying the course, while difficult emotionally, it’s likely a better decision for your portfolio. This does not mean you should just hold on blindly either. We would encourage you to look at the type of funds you are holding in your BP ESP and consider what their future prospects are for growth instead of being influenced by noise and fear.

Consider including defensive assets for more stability.
Defensive assets, such as cash and cash equivalents, Treasury securities, and other U.S. government bonds, can help stabilize a portfolio when stocks are slipping. Also, if you expect to spend from your portfolio within the next few years, it’s a good idea to hold those funds in assets that historically have been relatively liquid and less volatile than stocks, such as cash and short-term bonds. This can help you avoid having to sell in a down market.

Have a long-term perspective.
Markets typically go up and down. You are likely to experience several significant declines during a long investing career. Remember, even periods when the market fell by more than 20% historically, have been relatively short when compared to the subsequent gains in the markets that came after the drop. Because timing the market’s ups and downs is nearly impossible, investors should stay focused on their long-term investment strategy.

Market volatility is inevitable. As an investor, you should always keep that in mind. Markets will move up and down over the short-term and trying to time the market is extremely difficult, even for professionals. Maintaining a long-term perspective and ignoring the short-term fluctuations is essential to a winning strategy.

We hope these tips, insight and risk profile can help you when making your selection of what funds or model allocations you want to engage. If you would like to see how Capstone Wealth Advisors diversify your portfolio and reduce your risk, or would like to get additional information about our current economic outlook both domestic and abroad, please contact us directly at (877)739-6007 or email tyler@capstonewealthadvisors.com. As always, we will assist you free of charge and with no obligation.

Click here to view our Q2/2020 401(k) Model Allocations

Regards,

Tyler E Ryan
Capstone Wealth Advisors
877-739-6007
cwabellingham.com

 

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Stock investing involves risk, including loss of principal. International & Emerging Markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in Emerging Markets.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

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