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Advice for a Volatile Market

After a major run-up, the stock market has recently experienced some significant drops. Unfortunately, no one can predict with any certainty when such swings will occur. But in turbulent times like these, don’t panic. Instead, consider taking these steps to help you maintain perspective.

  1. Stick to your plan. Is your portfolio broadly diversified across asset classes and investing styles? Are your investments aligned with your financial goals, time horizon, and risk tolerance? If so, then why change anything? Often, simply doing nothing is the best course of action you can take.

    It’s important to remember that corrections and bear markets – while unnerving – are a natural part of investing. This can be difficult to do. However, it’s best to tune out the noise, maintain a long-term focus, and avoid making irrational decisions based on fear.

  2. Don’t try to time the market. There’s an old saying that successful investing comes from time in the market, not timing the market. Unless you have a crystal ball that can tell you the perfect time to jump out of and back into the market, market timing is not a practical investment strategy.

    By parking your money in cash, you run the risk of missing out on gains when the market recovers. Sitting on the sidelines – even for a short time – as the market regains momentum can be costly.

  3. Take advantage of buying opportunities. A market downturn doesn’t have to be a bad thing. Instead, it could be a buying opportunity. You may be able to take advantage of attractive prices on high-quality stocks that were once considered overvalued. Just make sure they fit into your investment strategy.

    If you regularly contribute to your 401(k) or IRA, you are already poised to capitalize on a down market. Making fixed, automatic purchases is a great way to drive down your overall costs, as you will buy more shares when prices are low.

Market volatility can be stressful, but you don’t have to go it alone. For 130 years, Stifel has helped guide investors like you through uncertain markets. Your Stifel Financial Advisor can help you keep your investment plan on track and serve as a valuable source of support and advice.