How to Overcome Turbulent Market Environments


Someone once said that do not just do something, but rather stand there! Regardless of their provenance, those words of wisdom can be exceedingly useful, more so when looking at your investments. Besides, if you are coming up with a practical asset allocation framework that is populated with sturdy investments, it is for the very reason of managing a portfolio that can withstand varying market conditions. Furthermore, no one wants an investment portfolio that needs babysitting.

In the interim, volatile markets continue to be the breeding ground for the preponderance of knee-jerk investment choices. Such decisions are often motivated by emotions rather than corporate fundamentals. According Sheaff Brock and many other investment professionals, one of the many things an investor needs to avoid is undertaking major portfolio changes in such turbulent times.

That having been said, it is true that volatile markets have a knack for making investors feel powerless. In a bid to regain that sense of control, investors will naturally want to do something. Below are some of the things you should avoid doing during those moments.

  1. Focusing on short-term market fluctuations

Getting concerned and even reaching out to financial advisers like Sheaff Brock is one thing, but it is an entirely different affair when you react too fast by making drastic modifications to your long-term investment portfolio. Long term investors cannot afford to speculate on short-term performance. This is especially when the reaction is attributed to short term market changes.

  1. Market timing

If you are a long-term investor, it is crucial for you to stay invested, especially during volatile market periods. The moment you decide to sell during market downturns, you will simply be monetizing your paper losses. In the long run, you miss out on crucial buying opportunities as well as improved performance on your investment as the market starts to recover. While market timing is still possible, it is one of those very challenging endeavors that require proper training to undertake.

  1. Media instigated reactions

As an investor, it is important to keep tabs on what is happening and any changes that occur. This can be done through following various forums or personal finance journalism among others. It is however important to beware of those twenty-four hour news channels that more often than not will either exaggerate or sensationalize market changes. You should not allow such media content to replace the analysis and research you had previously done.

If you need to be in control of your investment even during turbulent market periods, be sure to check that your liquid reserves are adequate. You may also want to check up on the asset allocation on your portfolio.