When we tell people that we’re CERTIFIED FINANCIAL PLANNER® professionals during times of market volatility, we get empathetic looks, paired with comments similar to, “Boy, that must be tough right now. Are your clients calling you in a panic?” This holiday season, we’ve been fortunate to be able to reply honestly, “Not really.”
As a team, we’ve spent the last year or two talking with our client families about how unusually calm things have been, and how it won’t always stay that way. We’ve encouraged them to hold back the next 12-24 months of expenses in cash, raised during times of all time market highs. We’ve assured them that market volatility is completely expected and normal.
So, instead of panicked phone calls, the majority of our client contact over the past month or two has been full of emails with pictures of grandchildren, calls to discuss philanthropic goals for 2019 and yearend tax planning with their tax professionals.
But, we understand that not everyone has this kind of comfort around their portfolio during tumultuous times. If the markets have you anxious, you might find yourself reflected in this common question. Here’s what we’d tell you if you were our client.
I heard there’s a recession coming. What do I do?!
First, breathe, and show yourself some grace. It’s perfectly normal to feel overwhelmed and concerned when the stock market zigs and zags, particularly when it does so as severely and suddenly as it has over the last few months.
Take comfort: your portfolio is made to handle market volatility. We structured it carefully that way. That’s not to say it isn’t in the red right now, but it is resilient. That is, as long as you don’t make any drastic moves. If you begin tweaking your allocation based on fear or panic, you will turn these paper losses into real losses. Real losses mean that there will be less money to recover when the markets turn upward again. If you are in a position to leave it be, leave it be.
Just because this volatility is expected and normal doesn’t make it comfortable. Times like this can provide a powerful message to you as an investor: maybe you aren’t as comfortable with risk as you once thought. We’ve discussed and revisited your portfolio allocation regularly over the years, but it might be different now that you’re experiencing it in real life. Maybe this is the time for us to revisit the overall allocation with the long-term in mind. Always, with the long-term in mind.
Let’s look at your expenses, your income streams and your portfolio. Let’s talk about your goals for 2019 and 2020. Let’s run some analysis and see what happens if we adjust your allocation. Let’s look at the long-term and see if the market volatility we’re experiencing today impacts your financial future.
Keep in mind, the 24-hour news cycle isn’t reporting on your portfolio. Let’s get some perspective around how what’s happening broadly impacts you before we make changes.
Our role is to steer you toward the goals you set when the ground didn’t feel so shaky; to use sound financial planning to bring comfort and confidence. Our role – one that we take seriously and are continuously humbled by – is to walk alongside you; to hold up the binoculars so you can look out at the horizon; to keep our eyes on the foreground and prevent you from stumbling over the pebbles (and sometimes, boulders) that will inevitably fall between you and your goals.
