When markets swing sharply, the instinct to do something feels almost overwhelming. However, quick decisions based on emotions can turn a temporary market decline into a potential permanent loss.
When your financial plan was put together, we kept in mind that markets fluctuate and diversified your portfolio accordingly. Diversification works precisely because different assets respond differently to the same conditions. When one area of your portfolio drops, another may hold steady or recover faster. This means that during market volatility, your portfolio is doing exactly as it was designed to do.
Yet, we often get the question, “Shouldn’t we sell?” While we understand the reasoning behind this question, it’s important to remember that, historically, markets are unpredictable and rarely can one anticipate exactly when a market will bottom out or recover.
Investors who moved to cash during past downturns often missed the sharpest recovery days, which tend to cluster close to the worst ones. Missing just a handful of those days over a long investing period can significantly reduce long-term returns.
Volatility feels urgent. But the decisions you make don’t have to be. Your plan was built to outlast periods like this one, and that’s worth remembering before making any changes.