Your Portfolio and Financial Advice Before Market Turbulence

Louis DeCuir |

It is human nature to seek advice when things aren't going well or when an unforeseen event occurs. Some seek financial advice from a professional only when the stock market and their investments are experiencing turbulent times. Reactive decisions made during periods of stock market volatility often cause investors to leave their current financial professional and move to another professional who wants to change their portfolios' composition during a market downturn. Moving investments during turbulent market periods can damage long-term consequences if occurring at low valuations or when repurchasing new shares.

However, not all liquidations during a down market are harmful and may provide tax-loss harvesting opportunities or repurchase shares at reduced prices.

Here are a few more things to consider before the next turbulent period arrives:

  • Market swings are a sign of a healthy market that is working toward a market correction.
  • Don't make sudden decisions to quit investing or 'go all in.' Continue investing using dollar-cost averaging to reap the rewards of low and high prices purchases over time.
  • Your investment's time horizon may be over many years (20 or more years for a retirement portfolio) and not affected by a sudden drop in value over a short period. Consider how long your retirement portfolio will be in the accumulation stage; it has experienced many market swings and likely will experience more.
  • Short term investments should be moved into cash and not the stock market if you think you will need them in the next few years.
  • Evaluate your financial professional's performance during the good and bad times of stock market performance. If there are issues that can't resolve, the best time to change advisors (and your portfolio) is when the market and your portfolio are favorable.

Remember that the best time to make important financial decisions is during good times and not the turbulent times when emotions may override good choices. If you have concerns about market volatility and your portfolio or our relationship, now is an excellent time for us to meet before the next unforeseen market event occurs.