Tough Week for Market & Thoughts on Investor Fears

September 23, 2022
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This week in the market has been tough, even for the most seasoned investor.  The never-ending “noise” we’re hearing on the news doesn’t bring much positivity, despite us moving into cooler weather and the joys of the upcoming holiday season.

The S&P 500 Index is set to finish over 3% lower for the fourth week in the past five weeks.  Investors are worried that given Q3 earnings warnings and other signs of a slowing economy, the Federal Reserve (Fed) will engineer a hard landing in order to curb present price pressures. The negatively goes on and on….

What do we do as investors?  Run for the hills with our damaged portfolios in tow? “Hey, at least I’m not losing anymore money and I can lick my wounds and heal on my own terms.”

As your financial advisors, Pat and I “earn our keep” during these exact times.  Our job is to push away much of the “noise” around us and get back to basics.  That includes ensuring there is money available to you now and in the future.  It’s a balancing act that combines investment knowledge and understanding investor behavior. 

I’m sure you’ve heard us say “there is no amount of statistical market data that will allow you to feel good about this market right now.”  We know that – you DEFINITELY know that! Right now our job and commitment to you is to listen to your fears and help you make decisions regarding your portfolio that are in your best interest.

A Little Exercise in Facing Fears

Let’s discuss your fears and put them on the table right now.  As your reading this, pause for a moment an acknowledge your worst fears about the market.  Bring it all….the horror, the turmoil, you being broke! I’m sure you can be creative and think of some we haven’t heard yet. 

Now….take a breath….and let’s put a pin in these ideas and try to think about what your situation or portfolio will be like in 5 years. Try not to “feel,” but rather “think” about your life in 5 years?  What does it look like? What does your portfolio look like?  What do you think happened to your portfolio based on our decisions made 5 years ago?

Do you want to know what we think?

We think that:

  • We have been very fortunate to have a longer growth market recently. If you remember our talks, the market is cyclical – periods of growth generally lasting 3-5 years with smaller periods of contracting lasting somewhere between 12-18 months.  That’s a normal market cycle.  There’s no wonder negative emotions run high now in this correction given our last growth cycle tipped around 7 years!  We’ve forgotten what contracting feels like!
  • De-risking at points of maximum stress can cause permanent damage. This means that we have done the research – folks that go into cash when the market is stressed cause more permanent damage to their portfolio vs. folks that keep their portfolio diversified in the market and ride out the storm. 
  • Despite corrections, long-term investors remain “above plan.” Another nod to those investors that have “white knuckled” the turmoil.  Those investors that have stayed full invested and fully diversified have fared better rates of return in their portfolios compared to the investors that tried to get out and get back into the market.

We hear your fears about the market.  We do understand them.  Pat and I want to ensure you that we are navigating your portfolio through these negative times.  We are thankful for your confidence in us and the opportunity to help you design a portfolio and plan that will be with you in the best and worst of markets! 

As always, please reach out.  We are available to chat and hear your concerns.  Please lean on us to help you drown out the “noise” of the market and economy and get back to the basics of remembering what your own goals are.  We can definitely help you achieve them.