If you invest long enough, at some point in time, the world gets turned upside down. Without notice, growth and prosperity can quickly turn to uncertainty and anxiety about the future. I’ve worked within financial markets and the financial advising business for 25 years, and during my career I’ve seen a few events that shook the confidence of investors globally: Long-Term Capital Management in 1998, the European debt crisis in 2011, and our own financial crisis of 2007-2008, among others.

We can now add a global pandemic to the list of potentially derailing moments that have already led some to utter the words:

“Never Be The Same Again…”

“The End of Capitalism As We Know It…”

“Changed Forever…”

Despite each of these events being different, they all had the same effect for financial markets: a swift de-risking of assets. Fear in capital markets produce doubt. Doubt leads to trepidation; trepidation eventually leads to panic, which inevitably leads to opportunity. While some events produced opportunity much sooner than others, it’s very hard to identify when a crisis ends and the opportunity begins. The old adage, “no one rings a bell at the bottom,” holds true.

How to Approach Investing During Stressful Times

I have listed a few ideas below that investors may find helpful during stressful times.

  • Avoid making predictions about when or if something will happen. Investors can easily be talked into or out of their financial or investment plans due to short term events.
  • Continue to invest. History has shown that major market events that caused dislocations were temporary and price corrections were indeed proven to be opportunities over time.
  • Patience is paramount. It’s not easy sitting through market corrections. But the truth is, corrections are part of the process. Since 1950 there have been 36 market corrections. That’s one every other year on average. Four out of five of these corrections had a lifespan shorter than 3.5 months. That’s hardly something to worry about.
  • Focus on the highest quality stocks.Our market is made up of all different types of companies, old to new, big to small. My investment thesis centers around high quality (large cap), well-capitalized businesses that can stand the test of time. I want these stocks to be around when clients need them at retirement. Purchasing high quality stocks during market disruptions, in my view, is a tactical strategy that will pay dividends in the future.
  • Stay properly allocated and rebalance your portfolio periodically.These two techniques maintain balance within a selected portfolio mix. This balance, in my view, helps investors stay focused on their goals and limits volatility during periods of uncertainty.

A thoughtfully built financial plan, designed to last for decades, will prevail over short-term bumps in the road as time passes by.

How Can I Help You?

If you’re not currently working with an advisor or you’ve lost contact with your current one, Let’s Start A Conversation. Contact me at [email protected] or by calling (615) 469-7348

William Bevins is a Registered Investment Advisor with the SEC. Mr Bevins began his Advising career in 1995 and has spent 18 years as a Professional Equities Trader. Today his firm, Cypress Capital located in downtown Franklin Tn, manages $270 million from Individuals, Small and Medium Size Businesses, Pensions, and Charities.