As the market continues to be volatile, it can be hard to know what to do here in Denton, TX. So here are a few tips you can use today:
TURN IT OFF
Everyone has an opinion, but in the world of modern media, “everyone” is often wrong, or at best, contradictory. Cable network business news, investment websites, newspaper financial pages, and even social media: the cacophony of opinions and lack of consensus can be overwhelming.Luckily, you have a financial professional who can perform in-depth analysis and market monitoring on your behalf. It’s our job to keep you informed of any relevant changes and shifts in the market, so you can tune out all the noise.
RESIST THE TEMPTATION
Volatility can play rough with your emotions. The temptation to jump ship during a downturn is strong, but timing the market’s trendline is nearly impossible. It rarely maintains a steady upward trajectory, but is rather more like a dance: 2 steps forward, 1 step back, over and over again. What may appear to be a peak before a precipice may simply be a brief correction on the way to new highs. When things are bumpy, resist the temptation to react in an emotional way, and remember that turbulence is part of the ride.
LOOK AT THE BIG PICTURE
Short-term market fluctuations can stir all sorts of emotions and may even lead you to make unwise investment decisions. Whenever possible, step back and take the long view. Are you investing for 10, 20, or 30 years? Longer? Viable investment strategies generally outlast volatility, which typically lasts days, weeks, or months.
Numbers from the past can provide insight as well. Although past market performance cannot serve as an indicator or predict future trends, the S&P 500 has generated an average 8% annual return through 2018, since adopting 500 stocks into the index in 1957.3,4 The S&P 500 is an unmanaged index that is generally considered representative of the U.S. stock market. (Remember, individuals cannot invest directly in an index.)
TAKE A DEEP BREATH
In a nutshell, the stock markets go up and down. That’s simply their nature. So, what to do when they’re down? Stay calm and take a deep breath. Watching the market too closely—especially when it nosedives or blasts off into the blue skies—can produce unwarranted stress or false exuberance. Attempting to find the exit door or entrance ramp on a jittery market is all ill-advised, even for the most studied investor. For the sake of your mental well-being, try to find some ways to de-stress, take a break, and relax as much as possible.
DO THINK TWICE
On the other hand, a volatile market is no reason to stick your head in the sand and ignore your financial picture altogether. Prudence is key to finding investment success. A flexible investment strategy can allow you to take advantage of appropriate opportunities that may arise, as long as they are suited to your risk tolerance, time horizon, and personal goals. Connecting with your financial professional can help to ensure your money is working for you in the long term—regardless of what the markets are doing this week or next.
So as Denton, Texas starts to open up, remember we have been through tough markets before. Just stay calm and stay safe Denton!