Shobe Insights—Special Edition

4 Tips For Navigating The Coronavirus Volatility


3 min read
4 Tips For Navigating The Coronavirus Volatility

When stock markets experience sudden downturns, investors can feel anxious and make decisions detrimental to their long-term goals. After all, when you’ve worked hard for the money, it’s painful to see your account balances drop. This is a natural reaction, even with savvy investors who’ve experienced market volatility before.

Now is not the time to panic and change your investment strategy. This is the time to stay level-headed, maintain perspective, and focus on the long-term. We recommend the following four strategies to help you navigate this challenging time.

TIP #1: “UNFRIEND” THE FINANCIAL NEWS

When the markets are volatile, the news cycles never end. While you want to be knowledgeable about what’s happening in your portfolio, you don’t want to overdo it. Watching more closely doesn’t improve the results.

Consider limiting the financial information you receive by social media, TV, and newspapers. Regardless of the medium, they thrive on negativity and these bits of information have a cumulative effect. The more you absorb it, the more you risk anxiety, fear, and even panic.

TIP #2: LEVERAGE YOUR FINANCIAL TEAM IN TIMES OF STRESS

Investing in the stock market involves risk. We all know that going in, but it’s only truly tested when the markets become volatile. It’s normal to feel anxious, concerned, worried, or even fearful. This is precisely why you want to work closely with your financial team, which includes your financial advisor, CPA, and estate attorney.

Each of these professionals provides a different perspective, not only for capitalizing on opportunities but also for keeping yourself level-headed. If your financial team is lacking in some area, leverage your advisor for recommendations.

TIP #3: RE-ASSESS YOUR “FINANCIAL PAIN TOLERANCE”
You took a risk tolerance questionnaire. Now is a great time to go through this exercise again. You’re older now, your life has changed, and your risk/pain tolerance likely has as well.

Many factors contribute to individual risk tolerance, including age and short- and long-term financial goals. Volatility can present the perfect opportunity to rebalance. Work with your advisor to find the ideal balance of investments to suit your comfort level.

TIP #4: REMEMBER THE END RESULT

Downturns are not rare events and statistics favor staying the course. The data below speaks volumes, showing in the year following the trough (low point) of a bear market, the returns were on average 47%. This is evidence of the value of staying the course.

4 TIPS FOR NAVIGATING THE CORONAVIRUS VOLATILITYThis data is as of February 26, 2020 and based on price returns from the S&P 500 Index, a market capitalization-weighted index of common stocks. Duration ends with a complete retracement of losses.

FINAL THOUGHTS

Remember, now is a moment to be cautious, not a moment to panic. You’ve worked hard with us to create a financial plan, stick with it. Historically, recoveries have rewarded patience. If you’re thinking about timing the market, remember that knowing when to get out is only half the battle; you also need to know when to get back in. Staying invested for the long term is far more likely to yield a favorable outcome.

If you’re concerned about recent volatility, contact us. We’re here to help.
 
*Sources:
Tools for Navigating the Coronavirus Downturn-https://vgi.vg/2UfVFfu

Before You Get Out of the Stock Market, Read This – https://bit.ly/2QXzN6L

Bloomberg, National Bureau of Economic Research , Haver Analytics, FMRCo (Asset Allocation Research Team)

Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. There is no assurance that any forecast mentioned will occur. Expressions of opinion are as of this date, subject to change without notice and are not guaranteed to occur. This is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. All opinions are those of the author and not necessarily Raymond James.

Posted April 14, 2020 in Investments News Articles

 

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