Watching the stock market last week might have felt a bit like riding a roller coaster. The week started with a sharp sell-off based on concerns that financial difficulties of debt-laden China could spread to other parts of the global financial system combined with worries about the Delta variant, slowing economic activity, debt ceiling brinkmanship in Washington, and uncertainty about Fed tapering.
However, stocks bounced back strongly mid-week following news that downgraded risks from China and a Fed announcement that its bond purchases would continue – albeit in moderation soon. The week ended with small gains despite a dramatic start.
The up and down activity was a good reminder of what wise investors already know. It’s not a matter of IF market volatility will happen; it’s a matter of WHEN. Calmly navigating turbulence comes down to having realistic expectations from the start. If you know that swings (for good or bad) are always on the horizon, you can brace yourself for impact and worry less about what happens from week to week and more about what happens over the long term.
A good financial plan is designed around your goals for the future and deploys diverse strategies and tactics to help you pursue them. It’s not dependent on a single sector or even merely your investment portfolio. So, don’t let the wild ride distract you from what you want most. If you feel nervous or want to stress-test your financial plan, don’t hesitate to give us a call.
Sources: The Wall Street Journal, Sept. 22 and 24, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.