How to Ride the Market Volatility Wave
By: Dave Geibel, Senior Vice President and Managing Director, Girard
In recent months, investors have seen a rollercoaster of activity in the equity markets. Such volatility may be even harder to swallow after experiencing a banner year in 2017, but it’s critical, in a period of volatility, not to overreact.
As a financial advisor, it’s my job to coach clients on what to do, or not do, and quite frankly, how to react to stock market direction. Recent headlines may be causing some concern, but below is my advice for what NOT to do right now:
Never make decisions based on emotions, panic or fear.
We’re often told to not make big decisions when we’re tired or hungry, so take that advice when it comes to your portfolio. Don’t make impromptu decisions. Often, making investing decisions based on emotions in the short-term will only hinder long-term potential.
Do not abandon a long-term plan for short-term worry.
No one wants to see the Dow go down 500 points, but, while I cannot guarantee it, history has shown that it shouldn’t stay down forever. Remember, for long-term portfolio objectives, one bad month doesn’t make a year and a bad year doesn’t make a lifetime. The stock market is cyclical and will always go through disruptive periods. Don’t throw away years of planning because of an uncomfortable month or two.
Don’t stray from the path.
Choosing to be an investor and putting your money into the stock market always carries some degree of risk. But, remember that you have chosen to be an investor, and with that comes the long-term outlook. History shows that the market weathers storms and provides upside potential. Stick to your plan and work with your advisor closely as he/she can help you stay the course.
In these trying stock market times, it is important for investors to know their triggers and how that tends to impact behavior. If you are prone to react after watching Fox Business and CNBC, then avoid being glued to the TV. Consider taking a break from investing phone apps. Don’t tear open portfolio statements if you know you will jump online and make drastic changes. Reacting instantly to volatility could ultimately offset years of positive gains or future gains to come.
Working with a trusted financial advisor can help you navigate these volatile times. To have a conversation about your long-term financial goals, contact us.