Uncertain/scary/frustrating markets: What to do? At a time like this, what we all want more than anything is for someone to tell us what is going to happen next. I wish I had that information. All I can say is, “I don’t know.” I don’t know where the bottom of the market is, what the economic fallout will be, or how the virus will play out.

What I can do is help you focus on the things you’re able to control (more on that later). The one thing we don’t have any control over: the financial markets. FACTS: The markets have always risen, despite short-term setbacks. History tells us this will be temporary, like every other crisis. The market goes down but has never stayed down. Market drops are a very regular occurrence. For example, the S&P 500 – the main index that tracks the U.S. stock market – has fallen on average 14.2% at least one point each year between 1980-2015.

The best thing we can all do right now is remind ourselves WHY we’re investing in the first place.

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Before we dive in deeper...let me acknowledge investing is hard and scary, especially the unpredictability of the markets.

Being scared is normal. It means you're human. Just look at the news....how could you NOT be at least concerned? I’m concerned too.

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Investing properly means following well established principles of portfolio design:

1 - Globally diversified

2 - Low costs

3 - Asset allocation (how you split up the pie)

When you're invested according to the principles above...the most important thing you can do right now is remind yourself of WHY you invested in the first place. That should bring your mind right to YOUR goals.

Remember, your investments were chosen specifically to give you the greatest chance of meeting YOUR goals. Your goals, not someone else's goals...yours.

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Your asset allocation decisions were made carefully to give you the best chance of reaching your goals. The data used in that process included the fact, the reality really, that markets would go up and DOWN.

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In other words, the data used to design your current investment portfolio included the sure knowledge that markets like this would happen. Scary markets are part of the plan. Investing means acknowledging that markets will be scary, because they’ve always been scary.

I know, I know, this time is different. Fair enough. This time is always different…..because it is actually different. The reason scary markets happen is always different, but so far...they’ve all ended the same, in that they all end. To assume that the recent past will go on forever doesn’t line up with history.

The best thing to do right now is to remind yourself the reason you invested in the first place. Have those reasons changed? Have your goals changed? Probably not. The entire plan is built on your goals.

If those goals have not changed, there is no reason to change anything else. We don't change our strategy and portfolio based on changes in the market (other than to re-balance). That would be like the tail waging the dog. We re-evaluate your investments when your goals change, not when the markets change.

So right now...as unsatisfactory as this answer is...the only thing to do is to stick with your current portfolio because it was designed based on your goals, and the knowledge that to reach those goals you would have to behave properly during a scary market like this.

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Final point: Let’s do our best to continue focusing on the things you’re able to control:

  • Diversification

  • Asset allocation

  • How much you save

  • Costs

  • Behaviour

It’s easy to be an intelligent, rational investor when the markets are going up. When things turn, especially when they turn as quickly as they just have, our intellect is no longer in the driving seat. Our emotions take over. We must listen to our emotions. Allow yourself to feel anxious, to feel scared, or guilty or resentful – whatever your emotions are. It’s normal and ok to feel that way. I am here to listen to you. The absolute key: we must not act on those emotions. We must do our best to control our behaviour during scary markets. We’re here to help you do just that.

We will continue to monitor the market developments on your behalf. Please reach out if you’d like to speak one on one.

Trent

Another resource: 7 Facts to Become Unshakeable

- Thank you to Carl Richards, for a lot of this content to help explain scary markets.