Volatility returned to the stock market in February with markets falling about 10%.

Sharp jolts like these can be nerve-wracking, even when you know that pullbacks are a normal part of long-term investing.

It’s also normal to feel anxious during sell-offs or uncomfortable as we wait and see if markets fall further.

We can’t change how we feel during volatile markets, but we can learn how to keep our emotions from affecting our investment decisions.

What’s your plan for volatile markets?

An 83-year-old investor told me recently that one of the most important lessons he’s learned over the years is not to react but to respond.

“That means having a plan and working through the plan, which after many years does not include panic selling,” he said.

I certainly encourage investors to have a plan for down markets. One part of that plan is your allocation to stock and bond funds. Bonds can buffer stock market volatility so investors who own both stocks and bonds are often better able to stay invested through up and down markets.

Your strategy is another component of your plan. A solid investment strategy that includes predetermined sell thresholds should lead you to respond to volatility in a disciplined way.

There’s another crucial part of your plan, and that’s you sticking to it. If you panic, there’s not much your allocation or your strategy can do about it. So, it’s important to identify what helps you stay calm in tumultuous markets.

Six ways to keep your emotions in check

Here are some ideas that could help you stay focused and avoid emotional mistakes:

1. Turn off the TV – You may need to ignore the news in volatile markets.

You expect the news to help you make sense of the world, but it disproportionately focuses on market declines, often using alarming terms to describe them. “Market Plunges”, “Worst Point Decline in History”, and “Why the Stock Market Is Crashing Now” were typical headlines in the midst of the recent pullback. This kind of sensationalism can stoke your fears and distract you from your long-term goals.

Years ago, an investor told me that he’d been getting really upset when the market fell. One day, his wife suggested that he turn off the TV. “You know what?” he told me. “It worked!”

2. Focus on what you know – In uncertain times, we tend to focus on what we don’t know, like how long the sell-off might last. Continue reading “How to Control Your Emotions in Volatile Markets” »

{ 0 comments }

fb-4certaintiesIn uncertain times, we tend to focus on what we don’t know: will the market rally continue or are we due for a sell-off? Is a down market a routine correction or the start of a serious bear market?

It helps to remind ourselves what we do know.

Here are four certainties to keep in mind:

1. Stocks have been the best way to make money over time

We know that investing in stocks has been the best way to make money over time: from 1950-2017, stocks, as measured by the S&P 500, have gained an average of 11% annualized compared to 5.9% for bonds. 

In dollar terms, this means that if you’d invested $100,000 in stocks, your portfolio would have grown to $840,219 over 20 years.

If you’d put that $100,000 in bonds instead, your portfolio would have grown to $316,600 after two decades.

Stocks have also had gains over every rolling 20-calendar-year period since 1950. 

Stocks have also been very volatile at times, and that volatility makes it tough for investors to hold stocks long enough to benefit from these terrific long-term results. But if you can stick it out, those gains can change your life.

2. Corrections are a normal part of long-term investing

We know that corrections are part of long-term investing. The market has declined at some point during every year since 1980, but in most years it has finished the year with gains. Continue reading “4 Certainties in Uncertain Times” »

{ 0 comments }

Markets Keep Going Up. Should You Worry?

January 12, 2018

Is the market too high? Markets have continued to rally in 2018, and while some investors are euphoric, others are concerned that a correction’s around the corner. On Marketwatch, FundX Chief Investment Officer Jason Browne reminded investors that market conditions will change eventually. “This environment pushes people to buy dips,” Jason said. “Will that last […]

Click here for More

Set Yourself up for Success in 2018

December 29, 2017

What do you want to learn in 2018? You might be looking for new investment opportunities. Maybe you’ve been invested in the U.S. and you want to learn more about how to invest globally. Or perhaps you want to read more about what you can do about higher interest rates so you’ll feel more confident […]

Click here for More

4 Ways to Weather Changing Markets

November 30, 2017

Markets and most investors have had terrific returns this year so far, but what should we do now? FundX CIO Jason Browne gave his take on the markets on CNBC’s Closing Bell. “When valuations get as high as they are, and everyone feels this good, two things tend to happen,” Jason explained. “One is volatility […]

Click here for More

FundX CIO Jason Browne Talks ETFs on Nightly Business Report

November 18, 2017

What’s the appeal of ETFs, and how should you use them? FundX Chief Investment Officer Jason Browne answered these questions on the Nightly Business Report on November 10, 2017. He also shared three ETFs that have strong recent returns because funds that have done well recently may continue to do well in the coming months […]

Click here for More

Get a Jump-start on Year-end Planning

November 15, 2017

This is the time to start preparing for the end of the year. This what we’re doing for our money management clients this month: we’re paying attention to the early estimated year-end distributions from mutual funds, and looking for ways to reduce taxes. We’re also making sure clients take their required minimum distributions (RMDs) and updating their […]

Click here for More

Tips for Getting Younger People Engaged with Investing

November 11, 2017

What can we do to inspire others to start learning about investing so they can build wealth and have the freedom to live the life they want? In investing, time is money, and we want to help younger people use time to their advantage by getting invested early. While you may recognize the importance of […]

Click here for More

FundX CIO Jason Browne’s Take on 5 Funds & ETFs

November 7, 2017

Is this a good time to own emerging market funds? What about balanced funds? FundX Chief Investment Officer Jason Browne answered these questions and more on the MoneyLife Show with Chuck Jaffe on October 26, 2017. Jason started by sharing some insights into FundX’s investment approach. “First, we identify how much risk you’re comfortable taking,” […]

Click here for More

A Little Risk Can Go a Long Way in Retirement

November 1, 2017

Have you ever wondered if you truly have enough money for retirement? You’ve hopefully been putting money aside for your retirement for decades now, and ideally, you’ve been able to increase your contributions over the years. This hard work has given you a substantial nest egg, but you’re still worried that you’re at risk of […]

Click here for More