What To Do During Market Volatility
After last year’s historically low volatility, its resurgence in 2018 has been hard for investors to stomach. In fact, a recent Allianz Life study found that 37% of investors are anxious about the recent volatility. (1) Are you one of them?
The markets took a big dip recently, reacting to fears of potential trade wars and an economic slowdown. After the Dow lost nearly 800 points, investors are understandably nervous. If you are worried about your retirement accounts, you’re not alone. But during stock market volatility, fear can lead to costly mistakes. Here’s how to get through volatility while keeping a level head.
Keep A Long-Term Perspective
At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble, and it won’t be the last.
History shows us that about every four years the markets post negative annual returns. In spite of that, the S&P 500 Index has averaged gains of 11.69% from 1973 to 2016. (2) And declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.
So, while things may be down for the moment, history shows us that if you wait a couple of years, the gains will far outweigh any losses you have experienced.
There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during market volatility.
Market volatility has increased in recent years, and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.
Trust Your Portfolio
We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of stocks, bonds, and other assets that are designed to work together to decrease overall losses. At Storey & Associates, we custom-design every portfolio with your specific time horizon and investment goals in mind. If you have questions about your portfolio, get in touch with our office.
Now is a good time to take a look at all of your investment accounts, including your 401(k), to make sure it is well-diversified. If you have not reviewed the investment accounts that we do not manage, get in touch with our office and we’ll take a look and offer recommendations to minimize potential losses.
Speak With Your Advisor
Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party. Storey & Associates is here for you. We understand how nerve-wracking market volatility can be, and we want to help calm your emotions with an objective review of your portfolio and how current events fit into an overall historical perspective.
We’re Here For Your Friends And Family
If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes simply speaking with a financial advisor may help investors feel more confident and less concerned with the day-to-day market activity. To contact us, call 330-526-8944, send us an email at firstname.lastname@example.org, or quickly and easily schedule a free introductory consultation online.
Harlan Storey is president and founder of Storey & Associates with more than 30 years of experience providing financial counsel to individuals, families, and small businesses. With a background as an estate planning attorney also providing tax services, Harlan now advises a clientele consisting of corporate executives, medical professionals, small business owners, and retirees. He specializes in income tax planning, business exit strategies, estate and insurance planning, asset allocation, and career transitions. In addition to his role as a financial advisor, Harlan is a member of the firm’s investment committee and manages the operations of the business. Harlan is a CERTIFIED FINANCIAL PLANNER (CFP®), member of the Financial Planning Association (FPA), and graduated from the University of Akron with degrees in accounting and law. Harlan was one of the earliest members of the National Association of Personal Financial Advisors (NAPFA), showing his commitment to fee-only financial planning. Harlan and his wife reside in North Canton, Ohio, and are the parents of two adult children. He enjoys spending time outdoors, running, kayaking, and tending to their two horses. Learn more about Harlan by connecting with him on LinkedIn.