Life in the era of COVID-19 is certainly unlike anything the vast majority of us have experienced in our lifetime. The last time the world faced a pandemic of this magnitude, the year was 1918. People around the globe struggled to combat a new foe in the form of a flu pandemic which washed over the world’s population over the course of two years.
Today, we are fortunate to have many more tools to study and manage the coronavirus. We are learning more each day, which will hopefully lead to a faster resolution this time around. But there is one factor of our current situation that feels quite familiar—that has returned cyclically time after time over the course of my career: the corresponding stock market storm we’re seeing. That isn’t new—and it isn’t a once-in-a-lifetime event.
The Great Financial Crisis. The dot-com bubble. Black Monday. Through each of them, I’ve fielded calls and visits from clients who worried that everything was on the line. But just as proper gear and a safe place to hunker down can protect one even in the worst of storms, so can a solid investment plan. Because my clients and I had prepared for circumstances like the ones we faced, they were able to make it through—reaching a period of sunny skies with much of what they had worked so hard to earn intact.
What can you do to weather a stock market storm? Here are a handful of strategies to help ensure your safety even in an economic downpour.
Harness the power of dispassion
When the market outlook is good, people tend to coast, letting their investments enjoy the ride. But when it seems as if trouble is brewing, they begin watching the market—and their accounts—like a hawk, panicking at the slightest provocation.
Unfortunately, that panic can lead to poor choices and less-than-stellar results.
The best thing you can do when the clouds roll in is harness the power of dispassion, understanding that if you’ve put the proper safeguards in place, a little wind and precipitation won’t blow the whole house down. Doing so will protect you from unnecessary losses and missed opportunities when the market rebounds.
Let diversity work for you
The benefits of diversity extend to so many areas of our lives—and the way we allocate and manage our money is no exception. Ensuring a diversity of assets helps you avoid placing all of your eggs in that proverbial basket. And though you may have been counseled about growth versus value stocks, diversifying across different market sectors and a variety of bond types is important. It’s really about building a portfolio tailored to your unique circumstances—whatever they may be.
A good advisor will curate a mix of holdings that will withstand market trials and tribulations and ensure you have the funds necessary to cover the cost of any upcoming life events—from your daughter’s wedding to a grandchild’s college tuition, and even an extensive home renovation. And they will institute a sound plan for tomorrow, whether that entails traveling the world, long-term care for a disabled spouse, a cross-country move, or all of the above. Most important, though, is that your diversification plan is specific to you.
Depend on someone you trust
When it comes to navigating your investments, you can certainly go it alone. Many people do—to varying degrees of success. But you can’t underestimate the power of a good advisor. What does that entail? Someone who moves beyond the conventional, with the experience and know-how to steer your ship through the choppiest of waters based on what they have learned in previous bad weather patches. It’s someone who will take into account your individual circumstances, crafting a strategy meant to fulfill your needs—and who considers not just what you must have to live comfortably, but also what you want.
That’s why I always ask my clients not only what their expenses look like—current and expected—but also what peace of mind looks like to them, and what they would do with their lives if money were no object. Those three inquiries help me compose a complete picture of the individual I’m working with, so I can build a plan that will weather whatever comes their way.
Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.Follow me on LinkedIn. Check out my website.
Debra Brede had a different idea in mind when she founded her investment management firm in 1989. A decade of industry experience made her realize that the needs of individual clients weren’t always best served by the typical Wall Street business model, where a firm sells its products to meet its sales goals. At the firm that bears her name, the individual needs of each client would be the primary focus. Today, D.K. Brede Investment Management Company delivers investment management services to corporations, municipalities, retirement plans, charitable trusts, and high-net-worth individuals based on the principle that every recommendation made is dependent solely on a client’s individual needs, as determined personally by Debra Brede herself. Debra is now a frequent media commentator on investment-related topics and is recognizable to tens of thousands of CNBC and Fox Business news viewers around the world. She’s also been featured in the Wall Street Journal, The New York Times, Businessweek, Financial Times, Reuters, Bloomberg, Forbes, and Kiplinger’s Personal Finance. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.
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