Markets Fall

October 2, 2015

mountain_climberLet’s face it: September sucked. Nearly all stock funds lost ground in September, and many areas of the bond market fell, too.

The third quarter of 2015 was the worst and most volatile for stocks in four years. Large-cap U.S. growth was actually a global bright spot for the quarter, and it was down roughly 7%. But that’s better than the small-cap Russell 2000 index, which dropped nearly 12% for the quarter or developed foreign markets, which sank 9%. The biggest quarterly losses came from emerging markets, down 12%, and commodities, which plunged 18%.

We can’t know if markets will fall further or if they’ll quickly recover as they did in 2011, the last time we experienced this kind of volatility. What we do know is that every year has pullbacks, but investors who stayed invested through previous declines were ultimately rewarded.

What’s Working

As always some stock funds held up better than others, and many recent leaders continue to be highly ranked in NoLoad FundX.  Most of the top diversified stock funds remain large-cap U.S. growth funds, which lost less than most international or value funds for the month. Most small-cap funds and ETFs lagged. Continue reading “Markets Fall” »


fb-corrections.coastMarket corrections are challenging, even for experienced investors. It’s tough to see our gains disappear, and it’s uncomfortable to wait and see if markets fall further. We often feel like we should do something to channel our fears into action, but most of us don’t make good decisions when we’re stressed or fearful.

But there are a few things we can do in down markets that support our long-term goals, such as:

1. Rebalance your portfolio

Corrections can be good time to rebalance your allocation to stock and bonds funds. At this point, most of us would be selling bond funds and buying stock funds. This can be tough to do when stock markets are in turmoil, but it is a way to take advantage of lower prices, and you’ll also have greater participation in an eventual recovery than you had in the decline.

If you normally rebalance your portfolio on a quarterly, semiannual or annual basis, consider doing so now, while the market is lower than it was two months ago. Here’s an example: if your target allocation is 60% stock funds and 40% bond funds, but your stock funds are now at 55%, consider selling 5% of your bond allocation and buying a stock fund to bring your portfolio back to its target allocation.

Need help allocating your portfolio to stock and bond funds? Click here to see 11 different allocations.

2. Follow your strategy

One of the benefits of an active strategy like Upgrading is that it leads us to take action based on what we know now — which funds are bringing in the best relative returns — rather than what might happen in the future. Each month, we consider how the funds we own are doing compared to other funds with similar risk, and if our funds start to lag, we replace them with better performers. In the wake of the August sell-off, we were led to replace two stock funds in NoLoad FundX’s model growth portfolio. Continue reading “3 Things To Do When the Market Corrects” »

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