04/29/2025

Your Guide to a Scary Market

Written by Geoffrey Schaefer, CFP®

If you have been investing for over a week, you have experienced a large market sell off. A sell off is just investor speak for a sharp and sudden decline. What most people see is just a red number when they login to view their investment portfolios which causes angst and worry.  We see drops of at least 5% at least once annually and drops of over 10% every other year on average. So, while these moves may be relatively common, that does not make them easy to stomach when they inevitably occur.

Here is a guide to getting through a scary market:

  1. It is ok to feel scared.

 “Fear keeps us focused on the past or worried about the future. If we can acknowledge our fear, we can realize that right now we are okay. Right now, today, we are still alive, and our bodies are working marvelously. Our eyes can still see the beautiful sky. Our ears can still hear the voices of our loved ones.”– Thich Nhat Hanh a Vietnamese Monk and Activist

We are all human and loss affects us more dramatically than gain ever will. You do not need to act like you are not bothered by a 3% plus drop in a day.  If you feel anxious and uncomfortable, acknowledge it!  Naming a fear will helps us to then put it in perspective.

  1. If you find yourself turning to the news with your worry and fear, stop immediately.

“Media cannot tell the great truths. It is all headlines and no history…Media goes crazier and crazier and crazier trying to capture eyeballs, no thought… the American household is inundated with noise.” – Nick Murray

 Your favorite outlet for news media, however well intended they may be, is not a resource in a time like this. Information and editorial panels will offer hundreds of facts and opinions while likely giving you little to no truth and context. Throw the newspaper away, turn off the cable news, turn off your phone notifications for a day or two. Good places to turn to are your friends and family- the here and now. Yes, the market and the economy are working out some kinks, but your kids still love you, your spouse still would love to go on a walk with you, your parents may appreciate a phone call. The more we can immerse ourselves in our values through this, the smaller the market problem becomes. Another great resource is your trusted advisor.

  1. If you have made a financial plan, your portfolio is built for this. 

 Market declines happen every year, and a correction of 20% or more should be expected every four years or so on average. If you are spending down your portfolio, you should have the safe money set aside to weather this. If you are building and accumulating, keep going. Make your monthly contributions, keep your 401(k) and brokerage contributions going, do not stop.  You get to invest at lower valuations, meaning better potential for long term growth. Proper financial planning will lead you to a portfolio designed for these types of market conditions.

  1. Inaction could be a great action. 

Gandalf wisely said, “A wizard is never late, Frodo Baggins. Nor is he early. He arrives precisely when he means to.” You can take this as a lighthearted quote, or a truth that the wise never rush to action. The wise will act when it is appropriate.

We’ll see the headlines “what to do with this market selloff” and we’ll even start thinking, “I have to do something!” False, we do not have to do anything. Too much activity can be very counterproductive in a choppy market. Whether you are thinking to should add more to the market or sell it all, pause and consider the overall plan. Do you have emergency funds? Do you have large upcoming expenses? Are you reacting or is this action in line with a disciplined long term financial plan? Maybe doing nothing is the best thing to do.

  1. If you need to talk through the current situation, hire a financial planner.

Sometimes talking through what we are feeling in reference to our portfolio and financial plan is all we need to put the noise of the news and our minds at ease. If you do not have a financial planner, but feel this is as good as time as any to find one, make a connection or ask a friend for a referral.  A good financial planner will not sell you a product.  A good financial planner will listen and advise in an honest and caring manner. A short list of planner requirements would be:

1) They are a CFP® professional,

2) They work at an independent firm,

3) they are fee only meaning they do not sell products for a commission, and

4) they come highly recommended by a friend, family member, or trusted colleague.

We all must know and understand, that we cannot begin to predict when market drops will occur and how long they will last. Our premonitions are limited to our hindsight. Our omniscience only extends to what we have experienced. It is for that reason that we must invest according to a plan. A plan that aligns our capital with our values and gives us a north pointing arrow when we can’t seem to see past our current circumstance.

Investor Peter Lynch said, “A stock market decline is as routine as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.”  Prepare and gain the confidence of looking beyond the circumstances of today. Perhaps everything will be alright.

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