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Is Now a Good Time to Capture Some Gains in My Portfolio?

A lot of people we’ve been meeting with have noticed that the stock market has far exceeded their expectations since the “Covid Crash” in March 2020…  and now they’re wondering how long this good fortune is going to last. They want to know: “Is now a good time to get out and capture some of these unexpected gains?” Our answer?  Maybe some of it.  

2020 was a volatile year. A quick glance at a chart of the S&P 500 from last year will remind us of just the type of market activity we’re talking about.

THAT kind of volatility is what we would call an e-ticket ride.

But this serves as a good reminder of several points we often discuss with investors when we’re planning for their retirement, and when we do periodic reviews.

Stocks: Historically one of the best performing asset class

While stocks have historically been one of the best performing asset classes over the long-term:

  1. Market corrections and crashes do happen. That’s why it’s usually a bad idea for those nearing retirement or in retirement to have 100% of their money in stocks. If you were 50% in stock, your portfolio may have dropped ½ as much, 40% – even less.  

  2. The stock market can drop 20% or more for reasons you’ll never predict.  Some people spend a lot of time and energy listening to market commentators and reading headlines while trying to forecast what’s going to happen next in the market. Often, it’s the thing that you never considered at all that will cause a market downturn. Hey – who could’ve predicted a pandemic that would affect the entire economy the way it did? Nobody.

  3. The best way to react to a market crash – or simply market volatility – is to be prepared for it, prior to it happening. We believe that means having a well-thought-out plan in place. One that helps you have an asset allocation that’s customized to you and your situation, and one that you feel comfortable with.

  4. If you’re retired, do NOT withdraw the money you need for your monthly expenses from your stock bucket. Having to sell stocks when they’re down, just to pay your bills each month, can be detrimental to your wealth.  That’s why we have multiple Buckets!

  5. As human beings, when it comes to investing, we seem to be wired to do the wrong thing at the wrong time. When the market is doing well, we feel great and want to buy (sometimes at all-time highs)! When the market is crashing, we panic and want to sell (sometimes at a low point)!  Having a Buckets plan in place may help give us the discipline we need to keep from making emotional financial decisions.

Is now a good time to capture some gains in your portfolio?

So let’s answer the original question: is now a good time to capture some gains in your portfolio? Think about it this way: if the gains we’ve seen are a lot higher than what you expected to have at this point, then yes — you may want to pare back on some of those gains and put them aside for those times when things start going south again. And they will go down again someday, as our market chart demonstrated. We just don’t know when — and that’s the reason for Buckets.

If you want to find out whether your particular situation warrants this “value averaging” strategy, especially if you haven’t reviewed your portfolio in the last 12 months or so, now may be a great time to do so! We want to make sure you have your Buckets in order and that your current asset allocation is one you feel comfortable with. 

Just give us a call. As always, the advisors at Lucia Capital Group are here to help.

Important Information:

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

No client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from Lucia Capital Group or from any other investment professional.

Examples cited are hypothetical, are for illustrative purposes only, are not guaranteed and subject to potential federal and state law amendments. There is no guarantee that you will achieve the results discussed or illustrated.

A value averaging strategy does not guarantee a profit or protection from loss. The investor sets a target growth rate or amount on his or her asset base or portfolio each month, and then adjusts the next month's contribution according to the relative gain or shortfall made on the original asset base. Since such an investment plan involves continual investment in securities, you must consider your willingness to continue purchasing during periods of high or low-price levels.

S&P 500 Index is an unmanaged index and includes a representative sample of large-cap U.S. companies in leading industries. An investment may not be made directly in an index.

Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.

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