Neal Owen on Market Volatility

By Neal Owen, president and founder

Recently there has been more concern than normal with market volatility. It is helpful to remember that volatility is normal, and there are simple things you can do to pursue a better investment experience.

Neal Owen on Market Volatility

Recently, the market has shown a lot of volatility. This can be unnerving, even when you have a solid plan backed up by an investment philosophy you believe in. Most of the time, it feels great to know that if you are a long-term investor, you can go about your life with the confidence that true conviction brings. When others are acting emotionally around you, it can be helpful to remember a few things.

First, volatility is a normal part of investing. We all know that markets go up and down— we might be disappointed with downturns, but we should not be surprised by them. Most importantly, for long-term investors, reacting emotionally to recent market volatility may be more detrimental to portfolio performance than the drawdown itself.

So, how do you tune out the noise? Working with a good financial advisor can help you see past the headlines and cultivate discipline and a sense of security, knowing you have a well-thought-out plan in place that is working toward your goals. That is the power of professional advice.

You can change your life in a profound way by having a healthy attitude about markets. Do you feel like you are being held hostage to the whims of markets? If you accept that markets work (and by “work”, I mean the markets go up and down), you can have a healthier, less emotional relationship with investing, anchored by the belief in the way markets work.

I understand that times like this can be difficult, especially since we do not know how long they will last. Focus on your long-term goals, and remember that uncertainty is actually part of what creates opportunity. Equities have higher expected returns than other investments because they require investors to bear additional risk. Without uncertainty, investors would not be paid for taking on this risk.

Much of the financial services industry is geared toward making people think they can avoid uncertainty. The future is unknown. We believe the best approach is to make informed choices, adjust as your needs and objectives change, and be okay with a range of possible outcomes. Remember: You are not in this alone. We are here to help you. A thoughtful, properly designed financial plan considers the ups and downs of the market, along the potential range of outcomes for the portfolios that you may be invested in.

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