Staying on Track During Market Fluctuation

1st Global
April 4, 2018

“Buy low, sell high” is often the first piece of investment advice we receive and the first sage wisdom we ignore when anxiety-inducing headlines like “Dow Plunges 1,175 — Worst Point Decline in History” appear in bold red letters across our television screens. With TV personalities and financial news outlets reporting daily market fluctuations in terms like boom or bust, it can be difficult for even the most-seasoned investors not to get swept up in the hype of market changes. Consider this scenario: if you stepped into an elevator and found just two buttons labeled “soar” and “plunge,” how would you react?

In times like these, it’s important not to listen to the loudest voice, but the most trusted. Your financial advisor is not motivated by ratings, viewership or advertising revenue, but has a single purpose in mind — to help you achieve your wealth management goals. While sound financial advice lacks the “sizzle” of the 24-hour news cycle, it’s also void of the unhealthy emotional triggers that steal your focus from your long-term goals.

While the market fluctuates on a daily basis, individual indexes and stocks are historically less volatile over longer periods.* Take for example, the performance of the Dow Jones Industrial Average pictured below. It is important to routinely meet with your advisor to measure investment performance; however, following investment performance too closely could make you lose sight of the bigger picture.

As an example, consider a personal weight loss goal. Doctors, trainers and dieticians would not recommend tracking your day-to-day weight fluctuations as you work to lose 20 pounds over a year. As you see the numbers on the scale move up and down, you may feel inclined to make frequent, and even unnecessary, changes to your diet and exercise plan. Instead, you may decide to weigh in weekly or monthly, tracking your weight loss at longer intervals to get a more accurate measure of your progress.

In the same vein, no financial advisor would recommend closely monitoring daily market fluctuation in relation to your portfolio. However, it is important to routinely meet with your advisor on a quarterly or annual basis to measure investment performance against your personal goals, and revisit your risk tolerance if you’ve experienced a life-changing event.

Unless life circumstances have changed, it’s important to ignore the herd and “stay the course.” During times of market fluctuation and uncertainty, remember to engage with your most trusted source — your financial advisor.

Dow Jones Industrial Average over time

*Past performance is no guarantee of future results.

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