Investment Thoughts for a Volatile Market

These are stressful times for all of us, both emotionally and financially. Before this year, who ever heard of "sheltering in place" and "social distancing." When you think back to events in your life that were emotionally turbulent, you probably recall the comfort that friends and family brought to you. Now, unless you are fluent in "Zooming" or competent with social media, you probably feel a bit cut-off from the rest of the world. The only solace is to remember, we are all in this together.

Financially, we are also stressed by the excessive volatility and abundance of BAD news. If Covid-19 wasn't bad enough, now we hear about the tremendous slump in oil prices. Oil prices have gone negative due to the massive reduction in demand. How does this effect our portfolios and better yet what can we do about it?

Remaining calm and focused on the end goal is priority #1. Successful investing requires discipline and an adherence to a few relatively simple rules.

Rule #1

HAVE A PLAN

When I say "Have a Plan", I mean a concrete in-writing plan for where you are today, where you want to get to in the future, and what investment route you are willing to take to get there. Investment assets should be positioned according to these goals and should match your investment risk tolerance. The stock market is going to go up and going to go down. History has proven that every decline in the market will be followed by a recovery.

Rule #2

INVEST ACCORDING TO GOAL

Too often, portfolios are designed as one big pot of assets. I do not think this works for most investors. I believe assets should be segregated by their investment time horizon. Money that is needed 1-3 years from today should be liquid, i.e. easily converted to cash. Money that is needed 3-5 years from now does not need to be fully liquid, but should be protected from market volatility. Money that may not be needed for 15 years, can be invested to weather the storms of the stock market.

When assets are positioned in this manner, there is much less stress because the only assets effected by the decline in the market, have a longer investment time horizon.

Rule #3

EVALUATE RISK TOLERANCE

Investing too aggressively, causes tremendous stress during volatile times. Risk tolerance needs to be reevaluated during these turbulent times. Remember, BUY and HOLD is a time proven strategy, but the key is the holding. Staying the course during down markets is the tough part of this strategy. This is why we all need discipline and goals and an adherence to our true risk tolerance.

One day, we will all look back at this pandemic and realize that just as the market declines of 2000, 2001, 2002, and 2008, this was an incredible BUYING opportunity.

If you have any questions or want to discuss further, please call me at 513-600-4540 or email me at jdduffey@everestfinancial.net

Stay healthy and safe!

Joe Duffey

Joseph Duffey of Everest Financial Inc., offers securities and advisory services through Madison Avenue Securities, LLC (MAS), a Registered Investment Advisor, Member of FINRA & SIPC. MAS, Everest Financial, Inc. and TruPartner Credit Union are not affiliated companies. Securities offered through MAS Program are not deposit accounts; not insured by American Share Insurance or other insurance applicable by the Credit Union; and not an obligation of the Credit Union; not guaranteed by the Credit Union; and involve investment risks, including possible loss of principal.