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WHAT SHOULD YOU DO DURING A STOCK MARKET DECLINE?

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Stock Market Decline

With only two trading days left in what is shaping up to be the worst year for the U.S. stock market since 2008, the major stock market indexes - (Dow Jones, S&P 500, and NASDAQ) - are down significantly. No one likes to rush time but 2022 can’t end fast enough. The housing market, inflation, interest rate hikes and the economy are of concern. 

investors are understandably nervous. If you are worried about your retirement accounts, you’re not alone. But during stock market volatility, it’s important to keep a level head to avoid financial mistakes.

 

STAY CALM

At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble and it won’t be the last. Declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.

 

PLAY DEAD

There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. 

Market volatility has increased in recent years and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.

 

REMEMBER THAT YOUR PORTFOLIO IS DIVERSIFIED

We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall losses. It’s important to consider your specific portfolio, investment horizon, and circumstances when reflecting on economic events. If you have questions about your portfolio, get in touch with our office.

 

REVIEW YOUR 401(K) AND OTHER ACCOUNTS

Now is a good time to take a look at all of your investment accounts, including your 401(k), 403(b) or your 457 deferred compensation plan account to make sure it is well-diversified. If you have not reviewed the investment accounts that we do not manage, get in touch with our office and we’ll take a look and offer recommendations to minimize potential losses.

 

SPEAK WITH YOUR ADVISOR

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third-party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion. 



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