Throughout your experience as an investor, you will live through many periods of market volatility. These periods may cause you to question your investment strategy, or even consider a radically different approach to managing your money. Without a doubt, the level of market volatility we’ve witnessed during the COVID-19 (novel coronavirus) pandemic is historically rare. Downturns in recent market activity can be unsettling, but it helps to look at the bigger picture. While the summer began with ease in pandemic-related restrictions, certainly enhancing the market, the rapid spread of the Delta and Omicron variant raised the likelihood of re-imposed restrictions, potentially stunting market growth going forward. [1]

Although these events can make investors anxious, a long-term perspective can help. Historical performance cannot predict future market results, but investors have already gone through bear markets in the past, and we are invited to remain calm through the latest disruptions.

Take a Step Back, Think Long Term, Avoid Hasty Decisions

Professional Insight

Despite the ongoing market volatility, the best advice we can offer Physicians employees may be the simplest: Take a step back, think long-term, and avoid hasty decisions you may regret later. The initial reaction to sharp spikes and drastic drops may be to exit quickly, but that could be the wrong move. However, we understand that it’s natural to question your investment strategy when markets are volatile. Here is some insight for Physicians employees, from a Financial professional; These steps could help you remain calm & focused.

Everyone has an opinion, but in today’s day and age, “everyone” is at least contradictory, if not wrong. Cable network business news, newspaper financial pages, investment websites, and even social media: Being bombarded with opinions and a lack of consensus can be overwhelming for even the most experienced investors. Fortunately, you dispose of a Financial professional who can perform detailed analysis and monitor the market on your behalf. It’s our job to keep you informed of any relevant changes in the market, so you can tune out all of the noise, and focus on your goals.

Market volatility can have a rough impact on your emotions. What looks like the peak before a precipice, may simply be a brief correction on the way to new highs. When the road is bumpy, resist the urge to react in a visceral way, and remember that turbulence is part of the ride. While no one can predict the future, holding a long-term perspective can help change how investors view market volatility and help them look beyond the headlines.

Short-term market fluctuations can wreak havoc on your emotions, and may even lead you to make unwise investment decisions. When possible, step back and look at the big picture. Are you investing for 10, 20, or 30 years? Longer? Feasible investment strategies generally outlast volatility, which typically lasts days, weeks, or months. Historical figures can also provide useful insight. Although past market performance does not serve as an indicator or predict future results, the S&P 500 has generated an annualized return of 13.9% in 10 years (2011-2020). The S&P500 is an unmanaged index that is generally considered representative of the U.S. stock market. (Keep in mind that individuals cannot directly invest in an index).

Simply out, the stock markets move unpredictably. That’s simply their nature. So, what to do when they’re down? Stay calm and breathe. Watching the market too closely- especially during downturns or dramatic rises can create a sense of stress or exuberance. With your mental well-being in mind, find some ways to de-stress, take a breath, and relax. When the stock market plummets, recall that this isn’t the first time it happens. The stock market has overcome a wide variety of obstacles. If you remain anxious, consult with one of our Financial Advisors.

Market volatility is no reason to stick your head in the sand and completely ignore your financial situation. Prudence is key to finding investment success. A flexible investment strategy can allow you to take advantage of fitting opportunities that may arise, as long as they are tailored to your risk tolerance, time horizon, and personal goals. Being in contact with your Financial Advisor can help to ensure your money is working for you in the long term, regardless of what the markets are doing this week or next.

Case Study: The Market Volatility in the Fourth Quarter of 2018

When stock prices pull back, the process reminds us of a reality we don’t like to think about: stock prices can’t always go up. Let’s take a closer look at 2018, which was the last time we saw the market fluctuate. The passage of President Trump’s Tax Cuts and Jobs Act in late 2017 helped bolster optimism and was widely credited for the market surges, as corporate executives expressed a renewed interest to invest in their companies and workforces. Most indicators painted a picture of a very vibrant economy and relatively robust growth. On the labor side, the unemployment rate was improving. Growth in wages and jobs also added to the rosy economic outlook. Market volatility picked up in September 2018. With the month coming to an end, the Fed announced a 0.25% hike in the federal funds rate and raised the potential for an additional hike before the end of the year. Though the hike was telegraphed to investors, markets trended lower following the news. Stocks dropped further in mid-December once policymakers raised short-term rates again. The markets struggled to manage expectations when the Fed said that it was staying.

The course with two more potential hikes in short-term interest rates for 2019.

Holiday market action led to a breathtaking rollercoaster ride, as the Dow lost over 600 points on Christmas Eve, then rose 1,000 points the day after Christmas, and the S&P 500 ended the year lower.6 By January 2019, worries about the ongoing trade dispute and a global economic slowdown added to negative investor sentiment. However, stocks quickly found firmer footing on news that the China trade talks would restart. Investor spirits were further buoyed when the Fed said that it would be flexible with its policies.

The most fascinating part of being an investor, some might say, is that no one can be certain about the future. For all we know, the most extreme part of the market ride of COVID may be behind us, or we may face new ups and downs. Regardless of what’s to come, keep in mind that bouncing trendlines are not strictly indicators of impending doom, nor spectacular opportunities. Rather, they are simply a typical aspect of the investing lifecycle. With a solid strategy in place, market movements can be anticipated, not feared. If we believe a change in your investment strategy is needed, we will reach out to you. Meanwhile, if you or a colleague from Physicians have undergone any recent life changes, or if you’re considering shifting your financial goals and wish to discuss your portfolio, we are here to help you. If you have questions about current events or recent market news that may affect your strategies, please reach out to us.

The Retirement Group is a nation-wide group of financial advisors who work together as a team.

We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.

TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.

Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.

Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.

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6. The Wall Street Journal, July 29, 2019