Investment Strategies with Aileron

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By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS

Q: My brokerage account dropped when the markets declined recently. Did I lose money?

A:Yes – if you sold your securities at a loss. No – if you stayed invested. The stock market always has ups and downs. The only time you make money or lose money is when you actually sell your security. All of the up and down movement in your account prior to the moment you sell are only losses or gains on paper.

Consider this: For the past 34 years, the S&P 500 has experienced a market downturn in EVERY year — with no exceptions, ranging from -3% in 2017 to -49% in 2008. Yet in 28 of those 34 years the S&P 500 ended up in positive territory.* In EVERY case, the year ended with the S&P 500 higher than its intra-year low. In all but six years, it ended up in positive territory.

The key is to not sell a position at a loss, but to instead wait for a recovery. For example, in 2020 the S&P 500 had a 34% pullback but finished the year up 18%. The timing of when you sell your securities is one of the biggest factors of how well or how poorly your investment will ultimately perform. Unfortunately, too many investors panic and sell in a down market. Last year, the difference between the high point and low point in the market was 50%.

Similarly, systematically harvesting your investment gains is too often ignored. Making a wise and timely purchase of a security is only half of a successful investment. Making a wise and timely exit is equally as important. Sometimes that requires emotional discipline.

A conversation with your trusted advisor about your personal risk tolerance and your emotional discipline would be time well spent.

This is for education only. Before using this information in any way discuss it with a financial professional. There are many risks associated with stock trading. You may lose some or all of your financial investment. Securities offered through Dempsey Lord Smith, LLC Member FINRA/SIPC. Securities offered through Integrated Financial Planning Member FINRA/SIPC. Advisory services offered through Dempsey Lord Smith, LLC. All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

Send your investment questions to: submissions@SuwaneeMagazine.com.

All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

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