Different Ways You Might Respond To A Down Market

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Today’s Question:

If the market takes a dive, what are you likely to do? Are you the type to try to control things by moving your money around? Would you rather pretend nothing is happening? Whatever your reaction to the market might be, Nathan will walk you through how to best pivot accordingly.

In The News:

[2:51] – All In The Name

  • Yahoo Finance says advisors with favorable last names do better than those without.
  • People often joke with Nathan O’Bryant that his Irish sounding last name might bring them a pot of gold.
  • Nathan shares a story of another financial advisor whose last name presents a challenge.

The Confidence Corner:

[6:16] Advice For The Over-Trader

  • We might feel like the more action we take, the more control we have.
  • It’s like being in a casino. You think if you pull the lever and nothing happens you should keep going until it does.
  • With both gambling and investing, that’s not the case. You want the right portfolio.
  • A buy-and-hold strategy is more successful in the long-term.

[7:50] Advice For The Panicked

  • If the market has a downturn, you might panic and feel the need to sell.
  • Consider the question, “If you sell, when will you buy back into the market?”
  • If you don’t know when to sell and don’t know when to buy, then you should stay in.
  • Panicking will not help your situation. In fact, it could make it worse.
  • Normal market volatility hovers around 2.5 percent a day.
  • In the last 100 years, the S&P 500 has had a period of time at least once a year when it has been down at least 10 percent.

[10:49] Advice For Someone With Their Head In The Sand

  • Being afraid to take any action isn’t the right reaction to a down market either.
  • When stock prices dip, sometimes, it’s time to rebalance. Sell bonds and buy stocks, reallocate, and rebalance your portfolio.
  • Get education and the confidence you need to understand investments.

[12:07] Advice For The Extremely Confident

  • Typically, 20-30 year olds feel this way when they have a long timeframe.
  • As you near retirement, you should know how your wealth is allocated and diversified.
  • You might be overweighted in certain areas of your portfolio.
  • It’s always good to regularly meet with an advisor.

A Point Of Wisdom:

Additional Resources:

Bill Bengen Article

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Your Guide:

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