Written by Tyson Ray, FORM Wealth Advisors | CFP®, CExP®, CIMA®
In my 27-year career. I am still able to count on one hand — although I’m about to run out of fingers — the number of times I felt it necessary to reach out and say, “We’re not worried about market fluctuations.” We don’t want you to worry about them, either.
We’ve got you covered!
Your plan and portfolio enable you to weather the market storms
As one of the founding partners at FORM Wealth Advisors, the CEO of the firm and the head of our investment committee, I want to remind you that the financial plan we have created specifically for you is your protection from the constant market ups and downs. The tailored financial plan we have built for you predetermines what you want to do in the future. We fund your plan by managing your portfolio in a way that optimizes your balance of risks and rewards.
Your portfolio is designed to meet the needs of your plan, and it has absolutely nothing to do with market fluctuations. The only way you can really hurt yourself in today’s market is to panic and sell — to “jump ship” during a downturn. History has shown us that what goes down must come up — whenever the stock market crashes, it always recovers. Your best strategy is to stay the course.
By the way, a stock market crash is a strong price decline across a majority of stocks on the market that results in a strong decline over a short period on the major market indexes (NYSE Composite, Nasdaq Composite DJIA and S&P 500). In contrast, a bear market is a time when stock prices decline and market sentiment is pessimistic. A bear market typically occurs when a broad market index falls by 20 percent or more.
No one knows what what the future holds. However, I do understand what is going on, and I take in a lot of feedback and a lot of different perspectives. I completely agree that what’s going on in the spring of 2025 is crazy. It’s unprecedented. But still, I’m not worried. I know the market is going to resolve itself.
History tells us the markets will always recover
Remember how worried everyone was during COVID? The world’s economies shut down. The initial market drop in March 2020 was dramatic. But did you know that the market ultimately recovered in just four months? It was the fastest recovery of any market crash over the past 150 years. Compare that to the 18 months it took the U.S. stock market to recover from its most recent bear market — the downturn of December 2021. That downturn resulted from the Russia-Ukraine war, intense inflation and supply shortages.
No matter how bad things get, they’ll get better. And even if the world’s trading system shuts down, it will open again eventually.
This is why I feel peace in the midst of portfolios that correct. When a portfolio corrects the markets, correct valuations come down and create a reset or a foundation for new growth. Actually, I get more concerned when markets keep going up without these types of corrections because they tend to blow out the excess and blow out the speculators.
Seize the opportunity in a downturn
While many people respond to a downturn by panicking and selling, we seize the opportunity to buy stocks that are 10 or 15 percent down from where they were a week earlier. Again, history shows us that investors who buy when the market is falling are often rewarded — if they wait out any further downturns that follow. Many call this strategy “buying the dip.”
Two facts have to be true for “buying the dip” to pay off. First, there must be a sharp decline in stock prices, and second, there must be strong evidence that they will rise again.
In general, this strategy works best if you aren’t about to retire. If you’re close to retirement, the dip might not rebound quickly enough for you to turn a profit when the markets are volatile. Before you buy during a downturn, we want to assess your overall financial stability, including debt you owe and how well-stocked your emergency fund is. We want to make sure you don’t invest money you cannot afford to lose in the short term if the market happens to decline further.
That’s what you pay us to do — to build your plan and adjust it as needed over time, to manage your portfolio and to encourage you to avoid reacting emotionally to the inevitable market fluctuations. If you can ignore the constant alarmist news reports about the markets and the economy, you can avoid the stress and anxiety that are so prevalent among investors. We’re here to protect your portfolio, your life savings and your plan from those fluctuations and from the dangers of reacting emotionally to downturns.
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Remember, we’ve got you covered. We are happy to have a conversation with you about how your plan, your portfolio and our ongoing advice help shield you from losses.
