Inflation. War. Crypto. A new subvariant. The world is a scary place right now – the stock market is jittery, the headlines are all over the place and you feel like you should be doing … something. We spoke with Baird Market Analyst Mike Antonelli about what investors with the itch to act can do in times like these.
- Control what you can control. Be super-focused on this. The market and the price of gas are not things you have any say over. But savings and spending – these things are all directly under your control. When times get a little unhinged, it becomes that much more important for you to act thoughtfully.
- Talk to your advisor – about your financial plan, not the market. Your financial plan was likely built to weather market corrections like this – conditions that (a) happen all the time, and (b) inevitably end. You don’t abandon your financial plan when the market gets choppy, just as you don’t jump out of a lifeboat when you float into icy waters. Your plan is your lifeboat – stick to it.
- Forget about market timing. When it comes to the stock market, there is no “good news” or “bad news” – it’s only “better” or “worse.” Stocks don’t rally when peace is declared – they rally when things are getting “less worse.” Do you know when stocks bottomed out in World War 2? Right before the Battle of Midway – the moment the tide of war turned in favor of the Allies. That’s why market timing is so hard – you never know in real time when the news is getting better. Selling and buying back “when things calm down” is a surefire way to lose money.
- Don’t hedge the unhedgeable. You can’t hedge against nuclear war – in the event of that kind of cataclysmic event, money will lose all meaning. Don’t bother buying insurance or selling stocks before the meteor hits – you’ll have no one to collect it from.
- Remember the lessons of history. It’s human nature to fret about “the worst-case scenario.” But the worst-case scenario has a funny habit of rarely coming to pass. Humanity does not splinter in a crisis – it comes together. (And if the worst-case scenario does happen? See No. 4.)
- Watch less news. Don’t spend your days doom-scrolling Twitter or watching the news nonstop – go outside and take a walk instead. Reconnect with your loved ones. If you let it, the constant worrying will crush you and wreak havoc on your health and relationships.
- Help where you can. If the world is experiencing a traumatic event, you can do more than obsess over the market. Search out ways to do some good by donating your time or treasure to helping those in need.
- Talk to someone. Are you trying to do this alone? Don’t. People make rash decisions when they’re acting alone. Whether it’s friends, family, an advisor – reach out and talk, especially if you’re afraid. If you’re worried about making a mistake with your money, give us at Baird a call and we’ll be happy to help.
- Accept that you are living through normal history. If you could look 20 years into the future, you know what you would see? The same as the past 20 years: crisis after crisis after crisis, interspersed by periods of normalcy. It’s been said that history is just one damn thing after another – once this worry ends, another will replace it. Endure, but know that in enduring you grow stronger.
- Do nothing. As humans, we are wired to act – it’s part of our DNA. But ask yourself: Is doing nothing an option here? Sometimes the most complex problems are solved with simplicity. Acting impetuously will likely only make a bad situation worse.
In times like these, it’s perfectly rational to feel worried. But know that there will always be some catastrophe that will make the market (and investors) nervous – when one calamity ends, rest assured there will be another right on its heels. These periods of volatility, tumult and fear, though – that is the price you pay for building up wealth through investing. Nothing in life is free – especially not money – so take a breath, hold on tight and take comfort in knowing this too shall pass.
The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.