Practice patience when stock market dips
You may have heard a downturn in the stock market is the worst time to dump investments or take a portfolio conservative.
But without an experienced financial adviser managing your funds, who’s going to be there to talk you off the ledge any time the market takes a tumble?
When the coronavirus outbreak reached the U.S. and stocks began plummeting from all-time highs to four-year lows, many investors ignored conventional wisdom and joined the sell-off.
Yet, as managing partner and wealth manager Courtnie Nein of Good Life Financial Advisors explains, selling while prices are sinking isn’t a money-making proposition.
“The worst thing that we can do is try to get more conservative in a dwindling market,” said Nein, also president and cofounder of Good Life Companies in Cumru Township. “It’s completely the opposite of what we tell people which is buy low, sell high.”
Markets have recovered back somewhat from their four-year lows on March 23, lending credence to the idea staying the course was the right move.
And though stocks remain volatile, albeit while trending slightly up over time, it’s typically best to wait for markets to rebound to reconsider investment strategies.
“Once things kinds of return back to normal, it’s taking a look and saying, ‘I didn’t like that, lets be more conservative go forward,’” said Nein. “Then we’ll kind of revisit the allocation and look at selling back.”
For many people, that may have been easier said than done.
Investors who manage their own accounts could be more prone to getting caught up in a scary moment such as COVID-19 pandemic, see the markets spiral and react — unloading stocks or setting their 401(k) to conservative in an attempt to minimize damage.
Having a person or company you trust to direct those investments could prevent you from making a costly mistake.
“Financial advisers are really designed to be there to keep people calm during events such as this,” said Nein. “In times of chaos, we help keep clients keep calm and prevent them from pulling all of their money out at the bottom of the market.”
General speaking, Nein and her Good Life associates are interested in taking on clients who are investing for the long haul, not just looking for a way to make a quick buck.
“The clients who stay the course usually fare better longterm than those who want to get in and get out.”
There are still some lingering concerns about which direction the markets are heading. Right now, the climate could best be described as tumultuous.
It could be awhile until stocks catch up what’s going on in the rest of the economy.
“I think it’s going to take the market a little bit of time to digest the true unemployment numbers,” said Nein.
However, investors who have trusted advisers could be better positioned to weather whatever additional disruptions that lie ahead.
“The big thing I found is clients were panicked during this time, but there were a lot more phone calls asking, ‘How are you doing,’ and saying, ‘Thank God we have you,’” said Nein.
“It was humbling to have clients reaching out to me when we’re there to take care of their life savings.”
“The worst thing that we can do is try to get more conservative in a dwindling market. It’s completely the opposite of what we tell people which is buy low, sell high.” Courtnie Nein, also president and cofounder of Good Life Companies