Sleep Tight Portfolio Fixes

You’ve got problems. We’ve got solutions. Use our guide to keep your portfolio from keeping you awake, no matter what the market does.

- DAVID MILSTEAD

“If it ain’t broke, don’t fix it” is a mantra that worked surprisingly well for investors for a very long time. After all, we headed into 2020 with a long, robust bull market and a humming economy. Then things got fractured. COVID-19 got much more serious, much more quickly, than many people expected. Stocks plummeted, and the market damage extended to bonds, too. // By late summer, the markets had completely recovered—but for many investors, the scars remained. And then, stocks started to wobble again. The 2020 turmoil has served as a wake-up call that a complacent investor is a vulnerable one. After all, uncertainties still abound, for stocks in particular. After a nearly straight-up trajectory since spring, more of a pause may be in store. Some market watchers worry about the vulnerability of the handful of tech stocks that have done most of the heavy lifting; other experts warn that the market has developed a worrisome speculative character. And of course, the coronavirus continues to take its toll.

With that in mind, we looked at some of the portfolio challenges that investors have grappled with in this tumultuous market. If you have any of the portfolio problems below, now is the time to fix them. Prices, returns, and other data, unless otherwise noted, areas of September 11.

You Took on More Risk Than You Could Handle

Many investors say they can stomach a 20% decline or more in their portfolio. But when it becomes reality, as it did in February and March, some realize they don’t have the risk tolerance they thought they did. The decline in the markets was sharp and shocking—the S&P 500 fell nearly 35% from February 19 to March 23.