What To Do During Market Volatility

Monday, February 11, 2019 | Leave a comment

By Darrell Bryant

After 2017’s historically low volatility, its resurgence in 2018 was hard for investors to stomach. In fact, a recent Allianz Life study found that 37% of investors are anxious about the recent volatility. (1) Are you one of them?

It’s understandable to be worried about your money in the current market environment, especially considering the five separate occasions last year when the Dow Jones moved more than 1,000 points in one day. (2) For some perspective, single-day 1,000-point gains or losses have only happened 8 times in history, which means if last year’s market movements felt overwhelming, that’s because they were. And what that statistic doesn’t include is the many other days where the markets had significant gains or losses under the 1,000-point mark.

What’s Causing The Volatility?

Keep in mind that some market volatility is normal. Investors have just grown used to the predictable returns of the past handful of years. That being said, there are some external factors at play right now that are leading to increased volatility—namely trade wars between the U.S. and China, interest rate hikes, and uncertainty about the global economy. If you are worried about how your retirement accounts will fare, you’re not alone. But during stock market volatility, fear can lead to costly mistakes. Here is how to get through this year’s (or any year’s) volatility without losing your cool.

Keep A Long-Term Perspective

At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble, and it won’t be the last.

History shows us that about every four years the markets post negative annual returns. In spite of that, the S&P 500 Index has averaged gains of 11.69% from 1973 to 2016. (3) And declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.

So, while things may be down for the moment, history shows us that if you wait a couple of years, the gains will likely outweigh any losses you have experienced.

Tune Out The Noise

In today’s digital world, we have 24/7 access to news media outlets, and there are a lot of them. With so many different voices fighting for our attention, headlines are getting more and more alarmist. We are constantly bombarded with articles and videos telling us what we need to do based on the last hour’s market performance.

Market volatility has increased in recent years, and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses. While easier said than done, successful long-term investors know that it’s important to stay calm during market volatility.

Trust Your Portfolio

We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of stocks, bonds, and other assets that are designed to work together to help decrease overall losses. At D.  Bryant Retirement Strategies, we custom-design every portfolio with your specific time horizon and investment goals in mind. If you have questions about your portfolio, get in touch with our office.

Now is a good time to take a look at all of your investment accounts, including your 401(k), to make sure it is well-diversified. If you have not reviewed the investment accounts that we do not manage, get in touch with our office and we’ll take a look and offer recommendations to minimize potential losses.

Speak With Your Advisor

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party. D. Bryant Retirement Strategies is here for you. We understand how nerve-wracking market volatility can be, and we want to help calm your emotions with an objective review of your portfolio and an examination of how current events fit into an overall historical perspective.

If you aren’t working with us yet, give us a call at (402) 932-2141 or email us at contact@dbretirement.com for a complimentary portfolio review where we will discuss your concerns.

About Darrell

Darrell Bryant, CFS®, CAS® is Omaha’s Retirement Strategist. As the founder of D. Bryant Retirement Strategies, he focuses on helping individuals and couples nearing retirement do so successfully. Along with more than 30 years of experience, he received the Certified Fund Specialist (CFS®) designation and a Certified Annuity Specialist (CAS®) designation from the Institute of Business & Finance. Passionate about helping as many people as possible in his community, he hosts Retirement Strategies Radio, heard Saturday mornings at 8 a.m. on 1110 KFAB. He has also written articles on financial planning that have been featured on Fortune.com, FoxBusiness.com, Money.com, and in the Midland Business Journal. To learn more, visit his blog, his website, or connect with him on LinkedIn.

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(1) https://www.allianzlife.com/about/news-and-events/news-releases/Though-More-Comfortable-with-Volatility-Americans-Still-Lean-Toward-Protecting-Retirement-Savings

(2) https://www.cnn.com/2019/01/01/investing/dow-2018/index.html

(3) https://www.thebalance.com/stock-market-returns-by-year-2388543

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