Many of us have experienced the following event during a flight: “Good morning, folks, this is your pilot speaking. I have put your fasten seat belt sign on as we will be experiencing some turbulence.” The word turbulence is certainly an accurate description of the investment markets during the first three quarters of 2022!
Sometimes it is helpful to pause and remind ourselves of the facts. The investment markets are cyclical. They always have been and always will be. On average, market corrections happen every 6-7 years. What we are experiencing is consistent with history and is to be expected!
With that in mind, here are several fundamentally sound, rational action steps to remember when experiencing a market downturn:
- Don’t buy into the media narrative that “this time is different”! Use the same sound decision-making process that you normally would use.
- Avoid the temptation to over-react and make investment changes. Most times, the best thing to do is to simply “stay the course.” Trust the diversification & re-balancing of your portfolio, as well as the diligent oversight provided by the Master’s Investment Review Committee.
- Try to avoid taking any money out of your investments while they are down in value. Instead, utilize your cash reserves for financial needs that may arise.
- If possible, look for opportunities to make additional investments while the markets are down in value. You will enjoy the benefit of getting more shares for your dollars!
- Stick to the plan! Your personal financial plan assumes there will be challenging periods of time like we are currently experiencing.
There is one powerful human emotion that keeps most people from doing the right thing during investment market declines… fear! This emotion causes individuals to make the exact opposite decision they would have made in the absence of fear. Remember how hard it is to follow the time-tested advice – “Buy Low & Sell High” when markets are falling? In investing, and in life, do not give in to the emotion of fear. Your portfolio and your life decisions will be better for it.
Remember that we are “on the flight” with you. We welcome the opportunity to offer input and direction to your financial decision-making process, especially during challenging times. We are here to help you successfully “arrive at your destination.”
