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“This Time Is Different”: Strategies for Dealing with Market Volatility

Knight Suffich


“No matter how calm you are, no matter how long-term an investor you are, no matter what your horizons, when the market is jumping around, you feel uncertainty in your gut and it’s hard to resist that.”- Peter Bernstein

If you pay any attention to any business news source these days you’ve more than likely heard the word “volatility.” Rising interest rates, international conflict, red-hot inflation, and a myriad of other issues are rendering markets extremely volatile. Although it can seem like a scary time to have your money invested, having an open dialogue with your financial advisor and adhering to some basic principles can allow you to alleviate some of the anxiety that goes along with investing in challenging times.

  • Invest how you have been, or start, if you haven’t.

    Taking a percentage of your income and saving it every paycheck either through contributions to a 401(k) or individual retirement account (IRA) is a great way to hedge against market volatility. In addition to the tax savings, this habit will serve you well during good markets as well as bad. Keep in mind that when market prices are low, you are buying equity in quality companies at a discount. Regular investments take advantage of both good times and bad because the risk is mitigated over time.

  • Don’t try to time the market.

    An old adage reads, “It’s not about timing the market, it’s time in the market.” Research conclusively and repeatedly shows that long-term investing in quality companies in a well-diversified portfolio produces better results than trying to pick times to jump in and out. This is especially true in volatile markets when you can miss out on the best days of market performance as well as very likely miss the best day to jump back in.

  • Develop and maintain a diversified portfolio.

    Work with your financial advisor to develop an appropriate mix of mutual fund and ETF investment vehicles that expose you to different segments of the broad market. This includes global investing in developed countries and emerging markets that often have market cycles that don’t correspond to those of the United States. Consider market alternatives when appropriate—real assets, credit strategies, etc.—that do not track the broader equity and bond markets.

  • History has a funny way of repeating itself.

    It’s easy to get caught up in the fear that “this time is different,” but history shows us conclusively that extreme market pullbacks are an essential part of the market cycle. History also teaches us that if we keep a long-term and disciplined approach to investing, it is extremely likely that we will enjoy a rate of return that more than offsets inflation. Most bull markets are stronger and last much longer than the bear markets that interrupt them.

  • Develop a down market strategy with your financial advisor.

    One of the most important questions to answer during a market pullback is, “What is my strategy?” There are many good answers, but one is not to sell out and wait until the market recovers to get back in. Working with a trusted advisor is helpful at these times as he or she can give you a factual, unemotional perspective on your long-term prospects, even when the short term is painful. One common strategy is “dollar cost averaging,” which involves slowly investing money over time to smooth out market curves. Talk with your financial advisor and consider accelerating your investments in bad market weeks or months.


    The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

    Any investment involves some degree of risk, and different types of investments involve varying degrees of risk, including loss of principal. It should not be assumed that future performance of any specific investment, strategy or allocation (including those recommended by HBKS® Wealth Advisors) will be profitable or equal the corresponding indicated or intended results or performance level(s). Past performance of any security, indices, strategy or allocation may not be indicative of future results.

    The historical and current information as to rules, laws, guidelines or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified, but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

    HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.

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