Investor Stress and Market Fluctuation
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffet
It’s hard to watch the news and not worry about your investments. We understand this. Every day comes with some new political upset, international debacle, scathing book or some other distraction. And with it, comes financial news which tethers itself to these headlines as if they have something to do with one another. It’s hard as an investor with skin in the game to not feel a pang of worry, or be tempted to act impulsively. But, believe it or not, the market corrects itself nearly every year and, if past history could predict future results (which it cannot) it might suggest that the Market is highly resilient and we as investors are too.
Desire to Act
We understand that your emotions can sometimes drive your investment choices, and we ask that before you succumb to the media frenzy and start acting rash, you take a moment and check in with your financial advisors. What may seem a cataclysmic moment in the market for you and your money, may just be a flash in the pan, or a small speed bump. This is also part of the reason you have a financial advisor in the first place. We invest and watch the markets and are here to help you decide what sort of action, if any, is needed in response to the shifting market. Investors often suffer from something called, ‘action-bias’ in rough times, which is the desire to do something, anything, rather than do nothing while the markets flail.
Before You Act
A few things to remember when you feel the stress of a dramatic market event: Firstly, our advice is often to stay the course. Like most things worthwhile, investing is a long game. We know ‘loss aversion’ or the desire to protect your assets, even if in protecting them, you make impulsive poor choices, is a strong natural reaction. It’s important to remind yourself that the market rises and falls, which is why short-term investments should not be concentrated all in stocks. And even if things had been going strong for a long while, remember past performances cannot guarantee future results. Your financial advisors understand all of this when looking at your portfolio. The market volatility is expected and unavoidable, which is why long-term investments are designed to factor in short-term market drops.
You have financial advisors for a reason and part of that is for peace-of-mind. It’s our job to watch the market daily and plan and protect your assets accordingly. If you have questions or would like to become more educated/active in your investments, then please contact us directly. There’s a lot of misinformation out there and it’s enticing to move with the herd sometimes, even when it may be unwise long-term. We’d be happy to go into as much detail as you would like about the what, where, and whys of the marketplace. We want you to feel secure in your investments and in our knowledge. We’ve had between 3 and 7 years in a bull market (depending on who you ask) and we may be due for a bear pull back. So, seek out advice and take a breath, sometimes in volatility better to avoid the daily reports and focus on the long term.
Take a Moment
In conclusion: Yes, the marketplace can be volatile and yes, the daily news can look downright apocalyptic from time to time. But the daily ups and downs in the short-term can be arbitrary to long-term investments. Better to rely on evidence-based data and your financial team. After all, we designed your portfolio to weather the storms. And of course, we’d be happy to discuss any fears or desired modifications to your investments that you have.
About the Author
As a Co-Founder, Craig brings years of hands on experience helping clients make informed investment and financial planning decisions. Craig takes great care in understanding his clients near and long term goals and implements an investment strategy around those goals.