Markets this week have been spooked due to bad economic news coming out of China, the world’s second biggest economy. Remember that markets are always cyclical, and that no one can accurately predict the tops and bottoms of each market.
Remember also, that media outlets need to grab your attention. So they’ll do it with ridiculously over-hyped headlines, declaring doom and gloom, chaos and mayhem. Why? Because they know bad news is far more compelling on the human psyche than good news is. And if they can get our attention, we will “stay tuned”, while they sell advertising.
The individual markets are like swimming pools. They fill and drain with water all the time. Your investments are the beach balls floating on the surface of that pool. At nVest Advisors, we prefer investments with solid track records, so we make sure our clients’ “beach balls” are full and solid.
But just because your beach balls are firm and stable doesn’t mean that sometimes, water drains out of the pool.
At nVest Advisors, we believe there are good reasons to sell an investment, but it’s almost never simply because the market as a whole is down. To extend the analogy, if your beach ball is holding air just fine, then we just need to wait for the pool to fill back up.
And this week, economic reports from China have caused some sizeable waves in the water. Our beach balls are bouncing up and down with the water level. But in most cases, there is nothing wrong with the beach balls themselves.
So for most investors, it’s time to stay the course. Let the markets settle and recover. Or even better, you may want to even add to your holdings while quality investments are priced lower.
We know it’s not easy. In fact, staying calm during a significant market drop is one of the hardest tasks an investor has to do. Here are 11 quick ideas to remember when markets get volatile, but if that’s not enough to calm your nerves, give us a call. Whether you are a client or not, we’ll be happy to spend a few minutes with you, to help you stay focused on your goals, not today’s headlines.