Experts Warn to Prepare For Turbulent Markets
AV News staff report

PALMDALE - Recent volatility in the global markets may cause even the most seasoned investors to feel shaken up. But, according to Edward Jones, short-term market turbulence can serve as a reminder that like flying, investing is not always a smooth ride.

 

"It's natural to feel nervous when your investments look like they're losing altitude, but it's important to stay the course," said Larry E Coltin, an Edward Jones financial advisor in Palmdale. "The best response to market fluctuations is to keep your emotions and your investment strategy steady."

 

Coltin offers some perspective on how to keep white knuckles at bay in turbulent times:

 

Turbulence is normal

Stock market declines are a normal part of investing. According to recent research, the Dow Jones Industrial Average has dipped by five percent on average 3.4 times a year. Bigger drops occur less frequently, with corrections (10 percent or more) once a year, and bear markets (20 percent or more) every 3.5 years. Volatility happens regularly and is no reason to sell a quality investment.

 

Fasten your seatbelt, not your parachute

Bailing out at 30,000 feet isn't the best reaction to turbulence. Similarly, some investors might react by jumping in and out of the market, which can significantly impact investment performance. Historically, the best days often follow the worst days. While no one can predict what will happen in the future, getting out of the markets after the drops may mean missing any potential recoveries.

 

Your destination determines how you travel

If you're traveling from the east coast to the west coast, turbulence shouldn't cause you to land in the Midwest and walk the rest of the way. With investing, switching to the relative stability of a short-term investment can place your long-term goals at risk. Volatility in the markets should not change your goal of retiring at a specific age or providing for your child's education.

 

Take the long view

Some passengers react to turbulence better than others. Some ignore it, and others simply sleep through it. Successful long-term investors take the same approach to volatility, focusing on their long-term plans instead of day-to-day fluctuations.

 

"A solid financial strategy is key to riding out these short-term ups and downs," says Coltin. "You can make small adjustments along the way, but unless you experience a significant life change, it's essential not to veer off course."

 

For more information about Edward Jones, please contact Larry E Coltin, Edward Jones in Palmdale, located at 38745 N Tierra Subida Ave, (661) 274-7846.