As many of you know, the past week has seen the market experience sharp declines that have undoubtedly stirred feelings of uncertainty and anxiety. I want to take a moment to address these concerns and provide some reassurance during this challenging time. First and foremost, it is important to acknowledge that market fluctuations are a natural part of the financial landscape. While the recent declines may seem alarming, they are not unprecedented. Market volatility is driven by a variety of factors including geopolitical events, economic data, and changes in investor sentiment. It is important to remember that these fluctuations do not necessarily reflect the long-term health of the economy, or the value of your investments. In times like these, it’s crucial to stay grounded and maintain a long-term perspective. History has shown that markets tend to recover over time, and periods of volatility can even present opportunities for growth and diversification. Here are a few strategies to follow during market downturns such as this one:
Maintain a long-term perspective
Short-term market fluctuations should not deter you from your long-term financial goals. Remember that investing is a marathon, not a sprint. By maintaining a long-term perspective, you can weather periods of volatility and benefit from market growth over time. There’s a large body of empirical evidence that suggests market timing does not lead to successful outcomes. Review your investment strategy at least annually to ensure it aligns with your long-term goals and objectives.
Diversify
Diversification is a key strategy for managing risk and reducing the impact of market volatility. By spreading your investments across different asset classes, sectors, and geographies, you can mitigate the effects of downturns in any single area. Consult with your advisor to ensure your portfolio is well-diversified and aligned with your risk tolerance.
Focus on what you can control
While you cannot control market movements, you can control your response to them. Focus on the things you can control, such as your spending habits, savings rate, and investment strategy. By taking proactive steps to manage your finances, you can reduce anxiety and your ability to navigate market fluctuations. Discussing a financial strategy with your advisor can help bring context to what matters, while anchoring those things to what’s in your control. We’re also here to help you take control of your financial future by, for example, developing new skills, upskilling, or reskilling through free access to online courses and professional certificates like Coursera available with our Elevate account.
Practice self-care
Managing anxiety amid market uncertainty is not just about financial strategy, it’s also about taking care of your mental and emotional wellbeing. Practice self-care by engaging in activities that help you relax and recharge. Whether it’s exercise, meditation, spending time with loved ones, or pursuing hobbies, make time for activities that bring you joy and reduce stress.
Speak to an advisor
Ensuring you have appropriate emergency savings set aside will help you manage your finances through economic uncertainty and market volatility. Consider seeking guidance from your Financial Planner who can provide personalized advice and support, helping you to make informed decisions and stay focused on your long-term goals.
We’re here to help
The recent market declines are unsettling, but they also serve as a reminder of the importance of staying grounded and maintaining a balanced perspective. Remember, market volatility is normal, but your long-term financial goals will endure. We’re here to support you every step of the way, and we encourage you to reach out if you have any questions or concerns.
Thank you for your continued trust and confidence in Coast Capital.
Sincerely,
Jay Gedge, CFA, MBA
Vice President, Wealth Management
