This past weekend, The Wall Street Journal’s “Intelligent Investor” column posed four questions that we should ask ourselves “to combat the market chaos.”1 They are timeless questions about how and why we invest, and I thought it would be useful to reflect on how we at Mercer Advisors would answer those questions as we digest what has happened in global markets in recent weeks.
Question 1: What do we own?
We can’t think about where we’re going without first taking stock of where we are. Our clients own exceptionally well-diversified portfolios: broad ownership of U.S., non-U.S., and emerging market stocks and bonds. And, when and where appropriate, real assets, private credit, and private equity as well.
This means we ultimately own many thousands of companies, across every sector of the economy, from basic metals and commodities to services, technology, and real estate. Our international stock holdings include many dozens of countries (46 at last count), with holdings domiciled in both developed and emerging market economies. Building a “fortress balance sheet” that’s capable of weathering (and recovering from) difficult economic storms requires nothing less — think walls, carefully designed, and maintained and consisting of many, many assets.
Question 2: Why do we own it?
Clients’ asset allocations should always be a direct function of their core objectives (i.e., goals and time horizons), risk tolerance, tax sensitivity, and liquidity needs. These considerations are why we built their portfolio the way that we did. We purposely design diversified portfolios because, by definition, diversification immunizes portfolios from being over-exposed to any single company, sector, asset class, or even any one country. A lack of diversification results in thin walls, which is not the stuff real fortresses are made of.
We own and manage broadly diversified portfolios because we know it is the most reliable approach to helping families achieve their goals. Less diversification results in a lower probability of success. That’s not an opinion; it’s math. And it’s math that’s supported by over a century’s worth of real-world data. A diversified portfolio isn’t designed to always outperform equities, but it should do so when it’s needed most — when steep market declines have investors’ nerves rattled and on edge.
Question 3: Has anything changed?
We should remind ourselves that markets and economies are always changing. Markets digest new information in real-time. So, yes, things have changed. And they’ll continue to change. In fact, change is a fundamental characteristic of market economies. Change means there will always be ups (the birth of the internet) and downs (the dot-com implosion). We don’t know with perfect foresight when or why markets (or even individual companies) will have downturns, but we do know they will continue to rise and fall as the world turns.
Therefore, the ups and downs of markets, which is part of the normal process of incorporating new information into prices, is not, and should not be, a catalyst for making asset allocation changes in one’s portfolio.
Question 4: Would you buy your investments today, at their current price?
Let’s go back to square one…why we invest in the first place. Investing is a means to an end. Has the end changed? Has anything changed in terms of your objectives (goals and time horizon), your tax sensitivity, your liquidity needs, or your risk tolerance? If anything has changed, now is a good time to meet with your advisor to discuss adjusting your financial plan or investment program. Just make sure to do so for the right reasons, not because of short-term changes in market valuations.
Consider this question outside the context of investing. Would you buy groceries if they just fell 15% in value? If it’s food you buy on a regular basis that meets your nutritional objectives and culinary preferences, and it just became 15% less expensive, then it makes perfect sense to head to the grocery store right now
The takeaway is this: If your goals and objectives haven’t changed, you should buy your existing portfolio at today’s market prices.
Conclusion: We’ve prepared for tough markets
If you did the right things at the inception of your portfolio — taking a long-view of your objectives, liquidity preferences, tax sensitivities, and risk tolerances — you need to ask yourself whether there’s any logical reason to change.
If your portfolio was thoughtfully designed using evidence-based, academically-verified, and time-tested investing practices, and if it’s performed within expectations during this market sell-off, then there is a strong case that you’re investing the right way. You should likely stay the course for the right reasons.
Click here for past insights about the recent market volatility and other interesting topics. Not a Mercer Advisors client but interested in more information? Let’s talk.
1 Zweig, Jason. “Four Questions You Should Ask to Combat the Market Chaos,” The Wall Street Journal, April 14, 2025. Available at: Four Questions You Should Ask to Combat the Market Chaos – (Paywall) WSJ
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