Investing In Uncertain Times
Sometimes, when you catch up on the latest news, you worry. Nations war, oil prices fluctuate, and state leaders weigh measures that could seriously impact businesses. All these things can leave investors feeling nervous. Have they set their investments into the right stocks or mutual funds? Do they have enough cash set aside for emergencies or to take advantage of falling prices?
In other words, are they prepared? Or does market volatility amid political uncertainties mean that investors need to completely rethink their long-term strategies?
To help guide worried investors, members from the Forbes Finance Council offer this advice:
1. Avoid the noise.
For a century now, we’ve had a stock market, and it’s never yielded anything but uncertainty. So, to a client expressing this concern to me, I’d say, “Avoid the noise.” If you’re investing and have a financial plan in place with allocations that align with your long-term goals, the rest out. Don’t let the naysayers turn your focus to fear and greed. Keep your eyes on the prize. – Justin Goodbread, Heritage Investors
2. Remember, the tail is not wagging the dog.
If we learn one thing from looking in the rear view mirror to the past, it is that market equilibrium eventually washes out the noise of political rhetoric. Politicians and governments follow the markets, not the other way around. Focus your attention on the speed at which you are reacting to real-time information, and quickly come to the realization that the tail is not wagging the dog. – Eric Solis, MovoCash, Inc.
3. Patience pays off.
If you’re investing to reach long-term goals, temporary market and political volatility shouldn’t concern you. If you look back historically, you’ll see that the markets have not only always recovered from political turmoil — they’ve also gone on to reach new highs. People who react emotionally to political news end up selling while the market is already dropping and missing the recovery. – Elle Kaplan, LexION Capital
4. Have a plan for the worst.
The market is expensive, market volatility has always been here, and political uncertainty is nothing new. If you’re concerned, that means you don’t have a plan for the worst — and the worst will happen. A portion of your portfolio should be set aside to satisfy income needs regardless of market volatility over a five- to 10-year period and take advantage of opportunities when they arise. – Casey Weade, Howard Bailey Financial, Inc.
5. Change your focus.
Political uncertainty is out of your hands. Alas, don’t dwell on it! Instead, be sure to protect your assets through conscious, smart investment decisions and save, save, save. – Ibrahim AlHusseini, The Husseini Group
6. Volatility and uncertainty often bring innovation.
One thing you see historically is that periods of uncertainty precede and drive innovation. This was true during the emergence of the Renaissance and industrialization, for instance. A fascinating, recent case study of this is the adoption of blockchain in Argentina. In the midst of massive deflation, bitcoin — an alternative financial mechanism that didn’t exist a decade ago — is growing 10% per week. – Jeremy Almond, PayStand
7. Be honest about what you see coming.
How concerned are you about the financial market and political world? A little bit? Somewhat? A lot? Not at all? How do you see it impacting your clients? Be honest about what you see coming. For instance, you might say, “things might be interesting in the next few years, but give it some time and it will stabilize and improve again.” – Ismael Wrixen, FE International
8. Buy a home.
Buying a home forces you to invest by imposing the rigor in making monthly payments, effectively building equity. Traditionally, home ownership through the buildup of equity has been a way to increase wealth. While housing prices may fluctuate over time, over the long term, real estate is one of the least risky investments when markets are uncertain. – Nick Stamos, Sindeo
9. Stay focused on the long term.
Warren Buffet said it best: “If you mix your politics with your investment decisions, you’re making a big mistake.” We consistently remind our clients to control what we can control. Keep your portfolio well diversified and in line with your risk tolerance, and keep fees low by investing in low-cost mutual funds. Stay focused on the long run and try not to let the short-term noise distract you. – Stacy Francis, Francis Financial, Inc.
10. Volatility isn’t the enemy.
Market volatility may seem scary, but it can also present excellent trading opportunities for short-term traders, especially in the currency markets. If you’re in the market for the long term, don’t let short-term volatility scare you. And if you’re trading for immediate profit taking, don’t be afraid to capitalize on sudden volatility; there are profitable trades to be found. – Sari Holtz, DailyForex
11. Skip to page 13.
Skip the sensational front-page news and focus on page 13. Much of what you read on page 1 is already being fully priced into the market, whereas no one is talking about page 13. – Seth Allen, Pinkowski-Allen Financial Group
12. Remember the five most important words in investing.
Remember the five most important words in investing: “It’s never different this time.” Americans are whipped into a continual frenzy by the media. Everything is made out to be a major crisis. If the market is down, then surely it will continue to plummet. If the market is up, then a crash must be just around the corner. Despite it all, humans today enjoy the greatest period of prosperity the world has ever seen. Make a plan, and stay the course. – Erik Christman, Oxford Financial Partners
Title: Investing In Uncertain Times: What You Need to Know
Author: Forbes Finance Council