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Weathering the Stock Market Storms

September 07, 2022

Bull and bear markets are not a new concept to most of us. Over the years, we have seen times of severe market volatility. When the stock market seems unpredictable, this is just a part of the journey to ultimately gain. It is important to learn how to sit tight and trust the process. Keep in mind, your portfolio will eventually begin to grow again, and the storm will pass. These are some key takeaways to remember when “weathering the storm”.

A recession is not a reason to sell.

One of the best predictors of the future market is the stock market itself. To attempt to understand what the market is going to do, we need to look at what the market has already done. In the past, there have been positive returns after a recession. While past performance is never a guarantee of future results, it is useful to have an understanding. Investing means you will accept the “bad” times in order to gain from the outweighing “good” long-term. Investing is a strategic choice- not a tactical one- and it is to be treated as such. No grantees, but the goal is always for you to profit and meet your financial goals.

Time the market.

When the stock market is on a decline, we understand it is hard to fight the urge to sell your stocks. The idea of keeping the money safe in your pocket is very tempting. However, without any risk, there is no reward. We are unable to predict the market for you. However, we can tell you what the market has done in the past. It is estimated that if you invested $1,000 in the S&P 500 continuously from the beginning of 1990 to the end of 2020, you would have approximately $20,451, despite all the downturns the market experienced over the years. That being said, there is no avoiding temporary risk. However, by speaking with your Financial Advisor, you will be able to figure out a plan to mitigate risk. Having a financial plan is one of the most important ways to avoid stress in bear markets.

Bear markets may be a good time to reevaluate your portfolio and financial plan.

A market downturn is a good time to speak to your Financial Advisor about how you may be able to freshen up your portfolio to “weather this storm” with a little more ease. This is a good time to tweak your investments, expand your portfolio, and trust that history will repeat itself. Besides having a portfolio that aligns with your goals, it is important to have a financial plan with your advisor to account for the good times and the bad. Be open about your risk tolerance with your Advisor so that when it comes time to wait out the downturn, you are confident in your portfolio.

No one can eliminate market volatility; however, your Advisor can work with you to ensure you are confident in the you have in place for yourself. Be sure to have open communication with your Advisor, and make sure your portfolio is just how you like it for times when you must “weather the storm”.