Surviving Market Volatility

One way to survive market volatility is to just not look. Yes, of course that makes sense, but this certainly is not practical, and most people invested in the market feel that they should know what is going on. I am guilty. I have stock tickers on my phone and check the market at least 3-4 times a day. On days that the market did well, life was good, days market tanked, life was not as good. Let me share with you a couple of reasons why checking your investment portfolio daily or even weekly might not be the best idea.

1. How does the media make money? By people tuning in, clicking on news links, so the name of the game is viewership. Can we at least say the news media is guilty of hype and sensationalism? If news wasn’t breaking or just in, would you tune in or click on the link?
2. If you have your investments in appropriate risk buckets and have liquidity built into your investment program, a plan is in place for this volatility. (Coming soon in my next blog I am going to talk about appropriate risk.) Volatility is expected. So, unless your goal is to day-trade and capture ups and downs, market movements should not trigger a buy or sell program. It is almost impossible to predict when to sell high and buy low.
3. I always say when the market is off, it is on sale, clearance pricing. I get it when you buy a sweater and walk into the store the next week, and it is 25% off, it is upsetting. But if you really like the sweater, wouldn’t you consider maybe buying another one cheaper. Market dips can be excellent buying opportunities for buying good quality companies at a discount price. I am not encouraging you to take all your cash and invest when the market is down, I am encouraging you to stay the course and continue to make you planned contributions. If you did have some extra liquidity, dips can be good time to put that money to work. Note the word EXTRA.
   My main goal with clients is to encourage them to stay the course. Unless something in their life has shifted their family situation, market volatility should not alter their investment program. Not looking daily might also help you sleep better.