Talking to someone about how you feel about the current stock market volatility can be beneficial, writes Peter Watson.
When the stock markets are volatile investors can get depressed, worried and fearful.
Then the dreaded question: What should you do?
Should you get out of the market by selling your investments even though they might have declined in value? The stock market’s ups and downs have been extreme. That often happens when investors are nervous and there are justifiable reasons to be nervous now.
The US threat of tariffs imposed on Canada and many other countries has turned the normal economic order upside down. Economist fear there could be inflation, a recession and massive unemployment.
There are two ways to think about this conundrum.
Think with your brain. Remember back in 2008 when the world was in a financial mess and stock markets crashed. The same thing happened more recently with COVID-19. In both cases any stock market declines fully recovered. Historically, that’s how stock markets work.
The second way to think about our current economic times is to listen to how your body is responding to the emotional side of investing. Your feelings are Important, and they are normal. Humans are not programmed well to just ignore the emotional side of investing.
Your solution to resolve any investment uncertainty you have now on how you should react to the current volatile stock markets can include reviewing your written Investment Policy Statement. If you do not have one, I recommend that it be a priority.
My column will hopefully allow you to take a longer-term perspective on your financial objectives and your investment strategy to achieve those objectives. Understanding the current environment might have clarity when considering your long-term goals.
And finally, speak with your financial advisor.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com
