Prepare your portfolio for the inevitable market dip!.

It is all too easy to get caught up in the euphoria of optimism when we're in the midst of a bull market. A solid domestic landscape has propelled strong returns.




However, such environments can often lull investors into believing that the current trend will continue unabated. Experienced investors will tell you that the only certain thing about markets is that they are uncertain and that the bulls simply won't run forever.




Being forewarned is forearmed when it comes to investing. Being prepared for all circumstances, including a possible correction today, will take the emotion out of making decisions. In fact, it will provide you with the clarity and confidence to navigate and take advantage of such an event when it occurs

Not that I want to cause a state of panic. But I do encourage investors to be fully prepared for, and take full advantage of, the next major correction when it occurs.




What does history tell us?

Anecdotally, history has shown that most 20 per cent plus corrections occur after significant bull market runs, and although low interest rates, the wall of money flowing into superannuation and the rise in popularity of exchange traded funds have helped the market recently, who knows what will happen next? In the US, the current bull market is more than eight years old. It is the second longest in history and the third best performer. History and the law of averages would suggest we may not be far from the next major correction.

But don't be downcast. It is about staying the course and not trying to time such events. Listening to the noise in the marketplace can cause us to act irrationally and make panicked decisions.



Steps to manage a correction:

1) Get your asset allocation to shares right

2) Have the confidence to ride through the cycle

3) Volatility creates opportunity