What To Do During Market Volatility

Fear increases financial news viewership and sells advertisements, but it doesn’t need to run your portfolio

The peaceful days of 2017 and its historically low volatility probably seem like a lifetime ago. If you recall, by the end of 2017 the S&P 500 Index had rallied for more than 400 days without a 3% decline, the longest such streak in 90 years.  Not so much today, as volatility has returned to its regular role as part of our investing experience.  If you’ve found yourself gritting your teeth or wringing your hands, you’re not alone.

It’s understandable to be worried about your money with all this volatility in the air, but you don’t have to stay in that anxious place. Here’s how to guard your money (and emotions) in a time of increased volatility.

Volatility Is Normal

Keep in mind that some market volatility is normal. Investors have just grown used to the predictable returns of the past handful of years. 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 uncertainty, and concerns about the global economy. If you are worried about how your portfolio will fare, you’re not alone.  But don’t let that fear lead to costly mistakes. Here is how to get through this year’s (or any year’s) volatility without losing your cool.

Stay Committed

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 dating back to 1900 shows us that stock market declines are an inevitable part of investing – with corrections (defined as a 10% or more decline) occurring about once a year and bear markets (an extended 20% or more decline) once every three or four years. While past results are not predictive of future results, each downturn has been followed by a recovery and a new market high.

While things may feel tense for the moment, history shows us that if you stick to your plan and hold for the long term, 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.

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 about how terrible the market is. We are constantly bombarded with articles and videos telling us what we need to do based on the last hour’s market performance.

Yes, market volatility has increased in recent months, but the media can often make it seem like each episode is worse than the one before. Fear and greed increase financial news viewership and sell advertisements, but they don’t need to run your portfolio.  Now is another great time to review one of our favorite sketches by author Carl Richards, reminding us what not to do when emotions threaten to take over:

Seek Opportunities

Market corrections can provide opportunities to invest in solid companies at lower prices. This is why rebalancing a portfolio is so important, because it gives you an opportunity to buy low and sell high. If you just can’t stomach the movements in your portfolio, take this moment to reassess your attitude toward risk and reward. The best time to consider your risk tolerance is when the market has fallen.  While you might wait to revise your allocation, keep what you learned in mind and take small steps to get yourself into a comfortable long-term allocation that stands the test of time.

Stick To Your Game Plan

Yes, volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be falling, your portfolio is made up of stocks, bonds, and other assets that are designed to work together to help decrease overall losses. At Windgate Wealth Management, we custom-design every portfolio with your specific risk appetite, time horizon, and investment goals in mind and evaluate each investment opportunity on its own merits.

Now is a good time to 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 review and offer recommendations to minimize potential losses.

Don’t Waste Your Worry

Whether you’re new to the stock market or an experienced investor, the more you understand about the economy and how market cycles affect your financial situation, the more equipped you will be to handle these tumultuous times. We strive to help calm your emotions with an objective review of your portfolio and an examination of how current events affect your long-term outlook. If you have any questions or concerns about volatility or your financial plan, you can reach us by calling (844) 377-4963 or emailing You can also book an appointment online here.

Perritt Capital Management, Inc. is the Registered Investment Advisor for Windgate Wealth Management accounts.  Neither Perritt Capital Management or Windgate Management provides tax advice. Consult your professional tax advisor for questions concerning your personal tax or financial situation.

Perritt Capital Management and Windgate Wealth are not responsible for, and expressly disclaims all liability for, reliance on any information contained in these third-party sites.  No guarantee that information provided in these sites is correct, complete, and up-to-date.

Information here is obtained from what are considered reliable sources; however, its accuracy, completeness, or reliability cannot be guaranteed.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

First published August 2019.

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