Coping with Volatility

Coping with Volatility

March 18, 2020

The longer we’re in this business, the more convinced we are that change is the only constant.  We realize that market ups and downs can be extreme and unpredictable.  We sympathize that volatility can play havoc with your nerves.  Even experienced investors sometimes overreact to short term drops in value.  It’s a natural human reaction to the stress that occurs when you see accounts go down.  In times like these, we like to remind our clients to expect the unexpected and try not to let emotion derail your long-term investment plans.  One of the most common temptations, is to lose patience and sell as prices continue to drop.  Today, I’d like to show you how to maintain a long-term view and keep short term ups and downs in perspective. 

Here at Hesen & Haslam, we focus on preparation:

Champion tennis player Arthur Ashe said “One important key to success is confidence.  An important key to confidence is preparation”.  We know market volatility has become a key fact of life.  So, how does Hesen & Haslam go into these uncertain times with confidence?  Preparation, preparation, preparation.

There’s a false dichotomy that’s been created in today’s investment world:  Some have been led to believe that in the face of market volatility, you must choose between closing your eyes, using a buy and hold investment strategy, or try to time the market.  Timing the market is risky, since it means guessing which direction the market is going to go next.  You could lock in a loss, or miss the market’s best days by selling at the wrong time.  Buy and hold can over time be much more successful than market timing.  

Planning is the Antidote to panic

We believe planning is the antidote to panic:  In other words,  the time to handle market fluctuations is... way before they happen.  So, *Before* the choppy markets hit, we help you decide which strategy may help you reach your goals- regardless of current or future market volatility.  In other words, we hope for the best, but plan for the worst. That way, when the markets get rough, the decision has already been made… to stick with the strategy that was already decided was appropriate for you and your goals.

Remember: Price swings are to be expected, and while past performance does not guarantee future results, the stock markets’ historical track record shows a long-term pattern of overall growth.  So, when markets get choppy, keep a long-term perspective and stay focused on your financial goals.