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Navigating the Down Market | From the desk of Glenn Leest

Navigating the Down Market

Along this life journey, we experience times of celebration coupled with moments of challenge. As we process the daily news events and their effect on the stock market, it is easy to feel as though, "We can't see the forest for the trees." During these times, it can be beneficial to pause, step back and consider the situation in its entirety.

Being an investor is not always easy. Especially now, considering the rise in conflict between Russia and Ukraine. Such geopolitical shifts can be the root of anxiety and leave us wondering how they might significantly impact the financial market or personally affect our investment portfolio

Historically, moderate drops in stocks or commodities are common in most years and tend to be brief. During market downturns of 10%, markets typically recover within four to five months. Maintaining a strategic approach while girding yourself with a winner's outlook can help you to remain calm while maintaining focus on your longer-term financial goals.

Understandably, a common response to periods of market downturns is to safeguard your investments. With that in mind, remember, "time is on your side." Based upon previous market downturns of 10%, here are two investment strategies which I highly recommend for a financially successful outcome.

  1. Stay the course (No course of action needed)

    1. Maintain your focus on longer-term investments, as financially feasible, while giving the markets time to recover.

    2. The US stock market is historically resilient and has a past record of recovering from short-term 10% downturns and typically bounces back quickly (On average 4-5 months). See table below.

    3. The markets are historically positive 4 out of every 5 years. So, if you can be patient, you will usually be well rewarded for such discipline over time.

    4. Maintain a broadly diversified portfolio appropriate for your investment objectives and risk profile.




  2. Take advantage of market dips

    1. If financial resources allow, purchasing more stock while it's "on sale" (i.e., prices are down) can be beneficial. A rebound to the 10% pre-dip market level means a 10% increase on your investment. That's called "buying the dip."

    2. A loss will not occur until your stock is sold. Large and established companies will usually rebound. So, one of the best places to be invested to recover from a market decline is to stay invested in the same stock positions.

    3. Occasionally clients may utilize market dips as an opportunity to shift up the risk in their portfolio by selling out of certain diversified holdings and using those proceeds to buy equities at a lower price. This strategy can work for those investors who don't have additional capital to contribute but are willing to accept more risk in their portfolio.

Based upon my experience, a total withdrawal from a down market has proven to be unsuccessful for clients who chose this route. Oftentimes, the client who exits the market during a downturn is hopeful to reinvest as the market improves. However, I have observed significant market increases which happen suddenly. Thus, leaving the uninvested client excluded from the benefit of a market recovery. Therefore, I do not recommend quitting the market, and then restarting. Quitting the market during a downturn strategy reminds me of a recursive Murphy's Law. Although it may strongly appear that washing your car results in rain, "Washing your vehicle in order to make it rain does not work!" Although a total withdraw from a volatile market may seem tempting, a total withdraw for this reason is a recipe for a "guaranteed loss."

As an investor, I am not immune to having unsettled feelings regarding market fluctuations. In previous articles I have discussed how it can be helpful to "take your emotions out of investing." For this reason, "I eat what I cook" and have the WTWM Investment Team manage my portfolio so that the investments do not contain bias.

To remain positively focused, it can be a helpful reminder to lessen the amount of time spent following the negative news. Oftentimes, media outlets have an agenda which tends to sensationalize topics which support their cause. So, turn off the negative news!

Please know that during a market fluctuation, I am available to assist you with navigating the journey. Each client portfolio is uniquely tailored to reflect and support the individual based upon their financial goals and risk tolerance. Together, we can reassess your current portfolio and make any needed adjustments to support your financial objectives. If you are interested in taking advantage of option number 2, please reach out so that we can come up with a game plan custom tailored to you.

If you have any questions about investing or are wondering how you can get started, I would be happy to meet with you for a no-cost consultation. You can e-mail me at gleest@wtwealthmanagement.com or call (928) 225-2474.

Sincerely,

Gleen Leest
Glenn Leest
Senior Investment Advisor



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There are no warranties implied.
Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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