What You Should Do in Response to Market Volatility
It’s been a wild few weeks in the market as investors try to gauge how the coronavirus will impact global growth and corporate profits.
In the sections below, I’ve provided links to the resources I sent to Plancorp clients, but first I’d like to share a few thoughts on the recent volatility.
One of the first things to accept as an investor is that you’ll occasionally lose money—sometimes a lot of money—on the way to earning a decent return. This is part of the risk you bear in exchange for higher expected returns on your investments.
The market will take twists and turns throughout your lifetime. The financial media will dramatize everything along the way making it even harder to stay calm and rational.
Meanwhile, the Internet has made access to stock market data and real-time portfolio values increasingly easy, which is problematic because it causes investors to lose sight of the big picture.
Why does this happen to us?
When the market goes down, our human fear instinct kicks in and makes us feel the need to do something. When our ancient ancestors heard a rustle in the bushes, they ran out of fear.
They didn’t have time to calculate the probability that the noise in the bushes was a lion versus the wind. Taking the time to think about it posed too much of a risk of being pounced on. Better to get away first and evaluate later.
Thankfully, most of us no longer need to worry about being hunted down by lions, but that instinct to react when we feel afraid or threatened remains. That makes it tough to not react when we get spooked by the stock market.
In my opinion, the best course of action in times like these is connecting with your advisor to review the underlying assumptions of your financial plan.
Don’t have an advisor? Feel free to schedule a call with me and we can discuss ways Plancorp helps clients through times like these.
Check out some of the additional resources below on how to make sense of the stock market swings.
Making Sense of the Stock Market Swings
I dropped by KTVI Fox 2 St. Louis to talk about the recent volatility and what it means for your retirement savings. We also get a chance to talk about to best position your emergency fund given low interest rates and discounted stock prices.
WATCH NOW: Live TV Interview: Making Sense of the Stock Market Swings
Other Resources I’ve Published in Response to Market Volatility
How Will the Coronavirus Impact Your Portfolio?
Published the day the S&P 500 entered a correction, this article covers my four initial reactions to market volatility along with what to do next.
Video Presentation: Special Market Update
Published yesterday, this recording of a 20-minute webinar takes a deeper dive into historical market returns during past epidemics, but also explores the ins and outs of Bull and Bear markets. The recording concludes with me answering common client questions.
Bonus Resource: Chapter 9 of Making Money Simple
One of the most important chapters in my book is Chapter 9: Facing the Realities of Market Downturns. If you haven’t checked out my book yet, now is a great time.
