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Reflecting On Risk Tolerance During Market Volatility

Each of us tends to have a time of year when we reflect more on what has been happening in our lives and look towards the future and what might be to come. For some, it is during Thanksgiving, or maybe at Christmas and New Year’s when spending time with family. For me, March seems to be the time of year when I am most reflective. Once we hit daylight savings time, the weather starts to warm up, and I start to think about planting flowers and getting out in my kayak. But I am also thinking of past experiences in life, and what I have learned through those times.

March 2020 and the volatility that we have been seeing this year in the markets have had me reflecting on all of the changes that have occurred in the past 29 years since I passed my first two of six securities exams on March 13, 1991. According to the Dow Jones Industrial Average historical data chart on Yahoo Finance, the Dow closed at 2,955.20 on March 13, 1991,*. If you had told me on that day in March that less than 29 years later on February 12, 2020, the Dow Jones would close at a record high of 29,551.42, I don’t know that I would have been able to wrap my head around it. However, what I did learn very early on in my career was that there would be plenty of ups and downs in the markets along the way that would affect how I view the risk tolerance of clients and myself.

During our meetings with clients, we often talk about risk tolerance, and how volatility and changes in the markets make each of us feel. While we have been in the midst of one of the longest-running bull markets there has ever been, it is possible to lose sight of how significant drops in the markets have made us feel in the past. If this season of market volatility has lead you to reevaluate how you look at market risk, please consider having a conversation with your adviser regarding risk tolerance and planning for your financial needs and goals.

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Bernicke Wealth Management, Ltd. (Bernicke) is an independent, multi-disciplinary firm with 25 employees located outside Eau Claire, in Altoona, Wisconsin. Our financial advisers provide wealth management services for individual investors, businesses, foundations, and nonprofits, including investment planning, retirement planning, estate planning, and tax planning.

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