What Should You Do About Market Volatility?

The U.S. stock markets had the worst day of the year on Monday, reacting to news of escalating trade issues with China and fears of an economic slowdown. After the Dow closed down 767 points, investors are understandably nervous. If you are worried about your retirement accounts, you’re not alone. But during stock market volatility, it’s important to keep a level head to avoid financial mistakes.

To put our current market environment in perspective, let’s take a look back at history. Single-day 1,000-point gains or losses for the Dow Jones have only happened eight times in stock market history, but in 2018 alone, there were five separate occasions when the Dow Jones moved more than 1,000 points in one day. (1)

It’s understandable to be worried with so much volatility in the air, but we want you to know that we’re here if you have questions or want to talk. Here’s what we recommend during times of increased market volatility.

Stay Calm

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. 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.

Play Dead

There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. 

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. We recommend not making changes in your long-term financial plan due to short-term market fluctuations.

Remember That Your Portfolio Is Diversified

Volatility and market declines are stressful. But keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall losses in times like these. If you have questions about your portfolio, please get in touch.

Review Your 401(k) And Other Accounts

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

Turn Off Your Phone (Or TV)

In today’s digital world, we have 24/7 access to the countless number of news media outlets. Because sensationalism sells, most of what you hear will be dramatic. 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. 

For example, think back to where you were in 2000, 2011, and 2015, all difficult years for the stock market. Do you remember what you did then? Probably not. Over time, these swings look more like bumps in the road as you zoom out and put today’s upheaval into the broader picture. 

Speak With Your Advisor

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion. 

We’re Here For Your Friends And Family

If you have friends or family who are worried about their financial plan, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. 

Sometimes simply speaking with a financial advisor may help investors feel more confident and less concerned with the day-to-day market activity. We’re never too busy to help those you care about, so please forward this email if you know someone who needs our help.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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