Market Volatility is Back. So Now What?

Benjamin Haas |

Market volatility is back. It was bound to happen. We, as advisors, are not surprised. What does worry me is the mindset of certain investors right now.

On the one side, there are certain long-term investors who don’t forget getting burned in 2008, or 2001, or 1987, etc. and feel it’s happening again. (This is not 2008. Nowhere close.) 

On the opposite side, it seems that certain investors have completely forgotten how quickly things can turn based on the last 18 months where the markets seemed to just go up,up, up.

Volatility is back, and both groups seem to be panicked again.

So what now? What do you do now that volatility has come back into the markets? Take a deep breath, and read on….

First – understand what volatility means. “Liable to change rapidly and unpredictably.” The key word is “unpredictably.” Remember that investing is not an exact science because investors are human, and emotional and can tend to make irrational decisions. What volatile does NOT mean is that your strategy is failing. When the fire alarm sounds, does it always mean there’s a fire?

Second – recognize that volatility is normal. Historically, 10% corrections happen once every 12-18 months. And they typically last only last one quarter, or 14 weeks. Not only is volatility normal, but also to the right investor, it could present opportunity. Warren Buffet is famous for saying “Be fearful when others are greedy and greedy when others are fearful.”

Third – review your financial plan (which should dictate your strategy). The reality is, that if you are NOT a short-term trader, and instead gear your plan around your personal income needs and growth objectives over long periods of time, then short-term stock market corrections really don’t matter. Maintaining a long-term view has not only been the smartest way to approach retirement planning, but it’s also necessary for being able to sleep at night.

Fourth – review the risk of your portfolio(s) and don’t be quick to change a strategy. If you study the objectives and expectations of your investments, you’ll probably find that some asset classes are characteristically volatile because they historically offer greater rewards over time. That makes their behavior right now normal and expected. They are doing what they are supposed to do.

Finally – trust the work you did developing a strategy at a less stressful time. Most consumers like to see merchandise on sale. Who wants to spend more than they have to for the things they want?! Take the same approach with your investments. If nothing has fundamentally changed with the product/investment, then you may want to consider buying more when items are undervalued.

In summary, volatility, while uncomfortable at times, is natural. To the investors on both sides, talk to your advisors when you get anxious. We are here to help.


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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.