Stock market volatility is never fun to deal with or try to understand, but it’s a normal part of being a long-term investor. If you are invested in the stock market, at some point you will have to deal with volatility. The only way to avoid this would be to keep your money in cash – which, of course, does not serve your long-term goals well.

When volatility occurs in the market, it is a natural human reaction to think that we need to do something, or we need to make some type of change. Most commonly though, the best thing you can do is to put on your long-term-view glasses and remember that throughout history, volatility has come and gone. If we look back over time from 1966 through the end of 2021, there have been eight bear markets, meaning a decline in the stock market of at least 20%. These bear markets have lasted on average 446 days. During this same period, there has also been eight bull markets, meaning an increase in the market of at least 20%. On average, these bull markets have lasted 2,069 days.* This tells us that remaining invested and weathering the storm is important to your overall financial plan.

Even if the best way to make it through times of market volatility is to think long-term, that doesn’t mean that you shouldn’t be doing anything when it comes to your finances. Market volatility can oftentimes create opportunities for investors. So, what exactly should you be doing in times of volatility?

  • Review your plan – Have you had any big changes in your life or goals that maybe does warrant a change to your plan?
  • Check your risk tolerance – Is the risk you are willing to take reflected in your overall financial plan?
  • Make sure your portfolio is diversified – During times of market volatility, if you are invested in one stock or one sector, your plan can be at risk if the market is really beating up those types of stocks. An example of this is tech stocks in the early 2000s and bank stocks during the 2008 financial crisis. By being diversified, your risk is spread out across hundreds, if not thousands, of different companies.
  • Look to rebalance your portfolio – When the market moves in big swings, it can cause your portfolio to get out of balance. Simply rebalancing it can help to move your portfolio back to its intended allocations. If the market is up, you are essentially selling high and adding back to the fixed income. If the market is down, you are buying low by adding to your equities. These are simple, but tested, strategies that may lead to better returns.

At the end of the day, we are all human. It is not unusual to be concerned by market volatility. Seeing account losses on paper can be unnerving. It’s important to remember that market volatility is a part of investing and while it is tempting to give in to fear, staying calm is often the best strategy. If we look at history as our guide, those who, in the past, have remained calm and disciplined to their financial plan have had the best investing results.


The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Myles Zueger and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.

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