Surviving Volatile Times

Although market volatility is a normal part of investing in stocks, when the stock market goes down, you might start asking yourself “how long will this last?” and “what should I do?” For many investors, market volatility can lead to anxiety.

Regardless of how “stormy” the market might be, it’s important that you remain long-term in your thinking, and that you don’t give in to impulse and try to time the market when things are volatile – there’s just no way to know when the best or worst trading days will occur. By taking your money out of the market when it is doing poorly, even if it’s only for a few days, you may significantly decrease your returns and disrupt your long-term plans.

A decrease in stock prices can be caused by any number of reasons – shifting economic policies, rising inflation, lower-than-expected corporate profits, international events or unfavorable tax legislation. But it’s helpful to remember that short-term fluctuations are quite normal and longer-term fluctuations are just as inevitable. The good news is that these periodic slides have not lasted forever. In fact, over the past 30 years, stocks have consistently rebounded from setbacks, rewarding disciplined investors with significantly higher gains. Since 1970, the stock market has dropped 10 percent or more 15 times. But over that same period, it has also risen more than 15-fold. That’s more than 1,400 percent, according to BTN Research by Mick Higley.

It’s human nature to get anxious at any early signs of trouble in the market. But staying calm is often the best approach. Patience and the proper diversified portfolio mix can help you better manage the natural volatility of market fluctuations.

With the recent volatility of today’s marketplace you, like many others, may have questions or concerns about your individual situation. Please don't hesitate to call a financial adviser today to set up an appointment for a thorough review of your portfolio and long-term investing strategies. That way, you can be more confident about your decisions.

FINANCIAL FACTS

Long Hours – Sixteen percent of Americans work at least 49 hours a week while 6.6 percent of workers put in at least 60 hours of work each week (source: Statistical Abstract of the United States, BTN Research).

By the Decade – The cost of living (as measured by the consumer price index) in the U.S. increased 25 percent in the decade of the ‘50s, 28 percent in the ‘60s, 103 percent in the ‘70s, 64 percent in the ‘80s, 33 percent in the ‘90s and 28 percent in the ‘00s. The CPI is a measure of inflation compiled by the U.S. Bureau of Labor Studies (source: Department of Labor, BTN Research).  

The Doctor Will See You – The average American aged 65 and older makes eight visits per year to a doctor, a hospital and/or an emergency room, i.e., once every one and a half months (source: Center for Disease Control, BTN Research).