Market Volatility: A Reality Check for the Long-Term Investor

By Brett Gottlieb

You don’t have to be a 24-hour news hound to know the investment sector is enduring a period of market volatility. If you’ve checked in with your brokerage account in the last few weeks, you’ve probably noticed significant peaks and valleys in your portfolio balances.

While the situation may feel ominous, the truth is that we’ve been here before and come out the other side. Although some historical events have permanently reshaped the American economy, they have not dismantled it.

If you have a strong financial plan in place, you don’t need to make too many changes to your investment approach. Here are some reliable lines of action for navigating the fluctuations of investment market volatility.

1. Keep Long-Term Portfolio Health in Mind

Your investment portfolio should already be constructed with long-term goals and perspectives in mind—which the vast majority of regular investors do instead of focusing on short-term gains.

Diversification is the biggest key to mitigating risk during market volatility. Blending a variety of growth-oriented stocks with more stabilizing bonds and cash is a common way investors reduce the effect of short-term losses.

With investing, staying committed to a plan is far more important than reacting to temporary market swings. A disciplined investor may be better equipped to withstand times of market volatility by concentrating on the bigger picture and future goals.

2. Look for Opportunities

No one relishes a market downturn. However, market volatility can sometimes present some unexpected opportunities for stability and even profit. Experienced investors may use market pullbacks to find fundamentally sound companies at a lower cost. In fact, if you’re contributing to an employer-sponsored 401(k) plan, its managers are already making those investments for you.

This isn’t a matter of timing the market to beat an oncoming crash. It’s about keeping your portfolio active and steady with reliable commodities. That approach may position you to reap the benefits as the markets bounce back.

As of the latest data, the S&P 500 has entered correction territory, experiencing a decline of approximately 10.1% from its recent all-time high. The average maximum downturn in a positive year has been 11% over nine weeks. Roughly every 365 days, the stock market undergoes a 10% drawdown. This means despite the tumult, this volatility is nothing unusual. In fact, it’s normal and even healthy!

Granted, the second Trump administration has been more unpredictable than the first. But we can expect more leveling out as the administration finds its footing.

3. Keep Your Emergency Fund Intact

Every long-term investor should set up an emergency fund. But it’s even more important to do so during times of market volatility.

When emergencies happen, this fund serves as a buffer for unexpected expenses. If you need major auto repairs or home maintenance, an emergency fund can save you from shedding investments at a discount to pay for them.

Financial professionals recommend keeping an emergency fund with at least three to six months of living expenses. It can assist you with short-term disruptions while your portfolio stays oriented toward long-term goals.

4. Stay Disciplined

Markets rise and fall, and companies come and go. But the overall marketplace has remained intact, overcoming occasional downturns and historically, has gotten back on track every time.

Some of the worst days in the market are followed by some of the strongest. Investors who don’t panic or dodge in and out stand to gain from those recoveries. Discipline may be tricky to maintain, but it has the potential to be rewarding.

Stay Grounded During Market Volatility

Volatility and risk are both parts of investing. With a strong investment strategy in place, temporary losses won’t derail your overall financial health. Instead, you have a solid foundation that is designed to allow profits to turn in the future.

The Comprehensive Advisor team can help you stay grounded when market volatility hits. Email us at info@ComprehensiveAdvisor.com or call (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees, in business administration and economics, and is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals, and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

Our team of qualified professionals have experience in the financial service industry, and our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial strategies for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a comprehensive retirement roadmap to help ensure their assets are preserved and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Investing involves risk, including the potential loss of principal. This article is meant to be general and is not investment or financial advice or a recommendation of any kind. The opinions and other information contained in this article are subject to change based on the market or other conditions. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward-looking statements. Please consult your financial advisor before making financial decisions.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. Insurance products are offered through the insurance business C.A. Financial & Insurance Services.Comprehensive Advisor, LLC is an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by C.A. Financial & Insurance Services are not subject to investment Advisor requirements. CA Ins. Lic. #6000262.  Review # 2945963 – 3/25