5 Keys to Navigating Pullbacks
By: Edward Jones
We're all concerned about the health and well-being of our families and friends with an added layer of what is happening in the markets. In fact, the only expectation we can have is that market volatility likely will continue for some time.
The financial and banking systems coming into this health care crisis were on firm footing, and still appear to be. We don't anticipate unemployment to experience a sustained spike, as we would traditionally see in a typical recession. You would see unemployment rise to excessive levels and then take a long time to find its way back down.
Given the economic foundation, we think the recovery in economic activity and business investment can be faster and more vigorous than we would normally see coming out of a recession.
We know this condition is unique. We don't expect it perfectly replicate this historical data. But markets ultimately find a bottom, and we think the broader-term outlook can remain positive.
What can I do?
We believe these five actions can help you navigate this period of uncertainty and market volatility:
1. Don't panic. This too shall pass. Now that can become a bit cliché, but we think we've learned time and time again, from market panics to market pullbacks, that those investors who keep a level head and make disciplined decisions put themselves in the best position to navigate the volatility.
2. Let your goals guide your decisions. It can become easy to base your investment decisions on headlines and fear. But importantly, your goals are the reason you're investing. Make sure your investment decisions align with those goals for the long term.
3. Put time on your side. As long-term investors, we are blessed with the advantage of time. Make sure you're evaluating your portfolio's performance and your ultimate achievement of your goals over a longer period of time.
4. Leverage the power of diversification and balance. You can't dodge every market twist and turn, but having a balanced, diversified portfolio can ultimately help you navigate it in a much smoother fashion.
5. Be opportunistic. Long-term investors don't need to capitalize on this pullback all at once but should consider opportunities to benefit from this decline over the longer term.
Talk to your financial advisor about whether these strategies may be appropriate for your situation to take advantage of this volatility and keep you on track to your long-term goals.
Edward Jones - Mae Luchetti