Many global stock markets are approaching “bear market” territory, meaning a decline of 20%. Volatility, as measured by the VIX index (pronounced vicks), is at its highest level in the last 5 years, so many investors are worried. Are you? Certified Financial Planner Paul Fain has three things to focus on during a crazy market.
PAUL, LET’S RECAP THE RECENT STOCK MARKET DAMAGE, HOW BAD IS IT?
- Dow Jones -13%
- Nasdaq -18%
- Foreign -13%
WHAT IS CAUSING ALL OF THIS MARKET VOLATILITY?
- Slowing economic growth
- Federal Reserve rate increases
- Trade relations with China
- United Kingdom (UK) Brexit vote
- Volatile oil prices
WHAT ARE SOME WAYS WE CAN TUNE OUT THE NOISE AND REMAIN CALM?
Here are three better things to focus on:
- Markets go up: over time, markets go up more than they go down.
- A diversified portfolio: is the best way to both weather declines, and, be positioned for rallies which always come.
- Short-term factors: political and economic issues are only short-term factors in how markets perform.
THOUGHTS ON 2019?
Probably more of the same, with investor patience likely to be tested.
- Stay disciplined (buy the dips).
- Play defense (keep cash and bonds available for short-term expenses).
- Focus on your longer-term plans.
- Be smart: you don’t check on the value of your house every day, why do you check your portfolio?
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