Why Staying Invested During Volatile Markets May Be the Most Important Financial Decision You Make

So let's get started with today's exciting podcast. You've probably heard phrases like:

"Markets are tumbling."

"Investors are nervous."

"Economic uncertainty continues."

"Is a recession coming?"

And if you’ve looked at your investment account during a market downturn, you've probably felt a few emotions yourself—fear, uncertainty, frustration, perhaps even the temptation to move everything to cash until things calm down.

Today, we're going to discuss one of the most important investing principles in building long-term wealth:

Why staying invested during volatile markets is often the key difference between financial success and financial disappointment.

We'll explore:

• Why volatility is normal
• What history teaches us about market downturns
• The hidden cost of trying to time the market
• How emotions can become an investor's worst enemy
• Strategies for remaining confident during turbulent times

WealthGrow - By Wharton Investment Consultants 5010 Canby Drive, Wilmington DE 19808 Tel: 302-239-2111

Securities and advisory services offered through Registered Representatives of Cetera Advisor Networks LLC (doing insurance business in CA as CFGAN Insurance Agency LLC), member FINRA, SIPC, a broker/dealer and a Registered Investment Advisor Cetera is under separate ownership from any other named entity.

Transcript

[00:00:00] Speaker 1: Welcome to Wealth Grow, [00:00:03] Speaker 1: where we discuss building wealth, [00:00:05] Speaker 1: securing your future, [00:00:06] Speaker 1: and making informed financial decisions. [00:00:10] Speaker 1: My name is Stuart Cameron, [00:00:11] Speaker 1: OSJ branch manager [00:00:13] Speaker 1: and financial adviser with Wharton Investment Consultants. [00:00:17] Speaker 1: A quick note before we begin, [00:00:20] Speaker 1: nothing here is personal advice. [00:00:22] Speaker 1: This is educational. [00:00:24] Speaker 1: Your situation is unique, and the right path depends on your goals, [00:00:31] Speaker 1: Speaking with your adviser, [00:00:33] Speaker 1: ideally a fiduciary, [00:00:35] Speaker 1: to tailor these ideas to you. [00:00:38] Speaker 1: So let's get started with today's exciting podcast. [00:00:42] Speaker 1: You've probably heard phrases like markets are tumbling, tax picture, and risk tolerance. [00:00:46] Speaker 1: investors are nervous, [00:00:48] Speaker 1: economic uncertainty [00:00:50] Speaker 1: continues, [00:00:51] Speaker 1: is a recession coming? [00:00:54] Speaker 1: And if you looked at your investment account during a market downturn, [00:00:58] Speaker 1: you've probably felt a few emotions yourself. [00:01:02] Speaker 1: Fear, [00:01:03] Speaker 1: uncertainty, [00:01:05] Speaker 1: frustration, [00:01:07] Speaker 1: perhaps even the temptation to move everything to cash [00:01:11] Speaker 1: and until things calm down. [00:01:14] Speaker 1: Today, we're going to discuss one of the most important investing principles [00:01:18] Speaker 1: in building long term wealth. [00:01:22] Speaker 1: Why staying invested during volatile markets [00:01:25] Speaker 1: is often the key difference between financial success [00:01:29] Speaker 1: and financial disappointment. [00:01:32] Speaker 1: We'll explore [00:01:33] Speaker 1: why volatility is normal, [00:01:36] Speaker 1: what history teaches us about market downturns, [00:01:40] Speaker 1: the hidden cost of trying to time the market, [00:01:44] Speaker 1: how emotions can become an investor's worst enemy, [00:01:48] Speaker 1: and strategies for remaining confident [00:01:51] Speaker 1: during turbulent times. [00:01:53] Speaker 1: If you're retired, [00:01:55] Speaker 1: approaching retirement, or simply concerned about what's happening in the market, [00:02:00] Speaker 1: this episode is for you. [00:02:02] Speaker 1: So let's get started. [00:02:06] Speaker 1: Volatility [00:02:07] Speaker 1: is not abnormal. [00:02:08] Speaker 1: It's the price of admission. [00:02:11] Speaker 1: One of the biggest misconceptions [00:02:12] Speaker 1: investors have is that a successful investment experience [00:02:17] Speaker 1: should feel comfortable. [00:02:19] Speaker 1: In reality, [00:02:21] Speaker 1: successful investing often feels uncomfortable. [00:02:25] Speaker 1: Think about it this way. [00:02:27] Speaker 1: When you fly somewhere, [00:02:29] Speaker 1: you expect [00:02:30] Speaker 1: occasional turbulence. [00:02:32] Speaker 1: You don't expect the pilot to land the plane every time the ride becomes bumpy. [00:02:37] Speaker 1: Market Volatility [00:02:39] Speaker 1: works similarly. [00:02:41] Speaker 1: The stock market has always had periods of fear, [00:02:45] Speaker 1: uncertainty,[00:02:46] Speaker 1: corrections, [00:02:48] Speaker 1: bear markets, [00:02:50] Speaker 1: economic slowdowns, [00:02:52] Speaker 1: political concerns, [00:02:54] Speaker 1: and geopolitical [00:02:55] Speaker 1: conflicts. [00:02:57] Speaker 1: Yet, [00:02:59] Speaker 1: despite all of these challenges, [00:03:01] Speaker 1: long term investors [00:03:03] Speaker 1: have historically been rewarded [00:03:05] Speaker 1: for remaining invested. [00:03:08] Speaker 1: Volatility isn't a flaw in the system. [00:03:11] Speaker 1: It's actually the price investors pay [00:03:14] Speaker 1: for the opportunity to earn higher returns over time. [00:03:19] Speaker 1: If there were no uncertainty, [00:03:21] Speaker 1: there would be no opportunity. [00:03:24] Speaker 1: The next time the market becomes turbulent, [00:03:26] Speaker 1: remember, [00:03:28] Speaker 1: volatility isn't evidence that something is wrong. [00:03:31] Speaker 1: It's evidence that you're participating [00:03:34] Speaker 1: in a functioning market. [00:03:38] Speaker 1: History lessons about market recoveries. [00:03:41] Speaker 1: Let's take a brief look at history. [00:03:44] Speaker 1: Over the last century, [00:03:46] Speaker 1: investors have lived through [00:03:48] Speaker 1: the Great Depression, [00:03:50] Speaker 1: World War two, [00:03:52] Speaker 1: the Cuban Missile Crisis, [00:03:55] Speaker 1: high inflation in the nineteen seventies, [00:03:58] Speaker 1: Black Monday in 1987, [00:04:02] Speaker 1: the dot com crash, [00:04:05] Speaker 1: the financial crisis of two thousand and eight, [00:04:08] Speaker 1: and COVID nineteen in 2020. [00:04:13] Speaker 1: At the time, each of these events felt unprecedented. [00:04:17] Speaker 1: Many investors believe that, [00:04:20] Speaker 1: this time is different. [00:04:22] Speaker 1: Yet after every major decline, [00:04:25] Speaker 1: markets eventually recovered and moved higher. [00:04:29] Speaker 1: The challenge [00:04:30] Speaker 1: challenge isn't that recoveries fail to occur. [00:04:33] Speaker 1: The challenge is that nobody knows exactly when they will occur. [00:04:38] Speaker 1: Historically, some of the strongest market gains [00:04:41] Speaker 1: have happened in the weeks and months [00:04:44] Speaker 1: immediately following periods of severe fear. [00:04:48] Speaker 1: Unfortunately, [00:04:50] Speaker 1: those are often the exact moments investors exit. [00:04:54] Speaker 1: By the time investors feel comfortable returning, [00:04:58] Speaker 1: much of the recovery may already have occurred. [00:05:01] Speaker 1: History teaches a simple but powerful lesson. [00:05:05] Speaker 1: The market's long term trend has been upward, [00:05:08] Speaker 1: but the path is never straight. [00:05:12] Speaker 1: The danger of trying to time the market. [00:05:15] Speaker 1: When markets fall, it seems logical to think. I'll just move to cash now and get back in later. [00:05:21] Speaker 1: Sounds simple? [00:05:23] Speaker 1: Unfortunately, [00:05:24] Speaker 1: it's incredibly [00:05:25] Speaker 1: difficult to execute successfully. [00:05:28] Speaker 1: To time the market correctly, you actually have to make two [00:05:32] Speaker 1: decisions, [00:05:34] Speaker 1: when to get out Perfect[00:05:36] Speaker 1: and when to get back in. [00:05:39] Speaker 1: Most investors [00:05:40] Speaker 1: focus only on the first decision. [00:05:44] Speaker 1: The second decision is often much harder. [00:05:48] Speaker 1: Imagine selling after a significant decline. [00:05:52] Speaker 1: Markets begin recovering. [00:05:54] Speaker 1: You wait for another pullback. [00:05:57] Speaker 1: The market continues rising. [00:05:59] Speaker 1: Now you're nervous about buying back in. [00:06:03] Speaker 1: Suddenly, you've missed a large portion of the recovery. [00:06:07] Speaker 1: Studies consistently show that missing just a handful of the market [00:06:13] Speaker 1: reduce long term returns. [00:06:16] Speaker 1: Here's what's even more surprising. [00:06:19] Speaker 1: Many of the Best days can significantly Best market days occur very close to the worst market days. [00:06:24] Speaker 1: That's why investors who leave during periods of panic [00:06:27] Speaker 1: often miss their recovery. [00:06:30] Speaker 1: The reality is straightforward. [00:06:33] Speaker 1: Time in the market is usually more important than timing the market. [00:06:39] Speaker 1: How emotions affect investment decisions? [00:06:42] Speaker 1: Let's discuss something often overlooked. [00:06:46] Speaker 1: Investing isn't just a financial challenge. It's an emotional challenge. [00:06:51] Speaker 1: When markets rise, confidence [00:06:53] Speaker 1: increases. [00:06:54] Speaker 1: When markets fall, [00:06:56] Speaker 1: fear increases. [00:06:58] Speaker 1: Human nature encourages us to [00:07:01] Speaker 1: buy when everyone is optimistic [00:07:04] Speaker 1: and sell when everyone is pessimistic. [00:07:07] Speaker 1: Ironically, that's often the opposite of what creates successful long term outcomes. [00:07:13] Speaker 1: Think about shopping. If your favorite store marked everything down by 20%, [00:07:18] Speaker 1: you'd likely be [00:07:20] Speaker 1: excited. But when the market offers investments at lower prices, [00:07:24] Speaker 1: many investors become fearful. [00:07:27] Speaker 1: The reason reason is simple. [00:07:29] Speaker 1: Markets involve emotions, [00:07:32] Speaker 1: and emotion emotions often override logic. [00:07:36] Speaker 1: One of the most valuable roles of a trusted adviser [00:07:40] Speaker 1: is helping clients navigate emotional decisions [00:07:43] Speaker 1: during uncertain markets. [00:07:46] Speaker 1: Because the greatest threat to many portfolios isn't Market Volatility, [00:07:51] Speaker 1: it's investor behavior. [00:07:56] Speaker 1: What retirees and pre retirees should know? [00:07:59] Speaker 1: At this point, some listeners may be thinking, Stuart, [00:08:02] Speaker 1: staying invested sounds reasonable if you're 35. [00:08:06] Speaker 1: But what if I'm retired? [00:08:09] Speaker 1: That's a great question. [00:08:11] Speaker 1: Retirement investors should absolutely absolutely be thoughtful about risk. [00:08:16] Speaker 1: However, [00:08:17] Speaker 1: retirement doesn't necessarily eliminate the need for growth. [00:08:22] Speaker 1: Many retirees may spend twenty to thirty years or more in retirement. [00:08:27] Speaker 1: Inflation remains one of the greatest threats to purchasing power. [00:08:32] Speaker 1: That's why many retirement [00:08:34] Speaker 1: portfolios [00:08:35] Speaker 1: maintain some exposure to growth oriented [00:08:38] Speaker 1: investments [00:08:39] Speaker 1: while balancing income needs and risk management. [00:08:43] Speaker 1: The goal isn't to avoid volatility [00:08:46] Speaker 1: altogether. [00:08:47] Speaker 1: The goal is to build an investment strategy that allows you to weather volatility [00:08:52] Speaker 1: without abandoning in your plan.Diversification, [00:08:55] Speaker 1: This may involve appropriate [00:08:58] Speaker 1: maintaining cash reserves, [00:09:01] Speaker 1: quality fixed income investments, [00:09:04] Speaker 1: periodic portfolio rebalancing, [00:09:06] Speaker 1: and adjusting withdrawal strategies when appropriate. [00:09:10] Speaker 1: A well designed retirement plan [00:09:13] Speaker 1: is built with the expectation [00:09:15] Speaker 1: that the market downturns [00:09:17] Speaker 1: will occur. [00:09:21] Speaker 1: Practical strategies for staying confident during market uncertainty. [00:09:26] Speaker 1: Here are several practical ways investors can remain disciplined [00:09:30] Speaker 1: during volatile periods. [00:09:33] Speaker 1: Focus on your goals. [00:09:35] Speaker 1: Remember why you're investing. [00:09:38] Speaker 1: Your portfolio [00:09:39] Speaker 1: exists to support your life goals, [00:09:42] Speaker 1: not to win today's market prediction contest. [00:09:47] Speaker 1: Limit financial media consumption. [00:09:50] Speaker 1: Many news headlines are designed to attract attention, [00:09:54] Speaker 1: not promote sound investment decisions. [00:09:57] Speaker 1: review your financial plan. A good financial plan accounts for uncertainty. [00:10:03] Speaker 1: Reviewing your plan can provide perspective. [00:10:08] Speaker 1: Rebalance rather than react. Instead of making emotional decisions, [00:10:13] Speaker 1: consider whether portfolio [00:10:15] Speaker 1: adjustments are needed based on your long term goals. [00:10:19] Speaker 1: Work with a trusted adviser. [00:10:22] Speaker 1: Having it having an objective professional [00:10:25] Speaker 1: can provide reassurance [00:10:26] Speaker 1: and guidance [00:10:28] Speaker 1: when emotions run high. [00:10:31] Speaker 1: Inclusion. [00:10:32] Speaker 1: As we wrap up today's episode, remember this. [00:10:35] Speaker 1: Market Volatility [00:10:37] Speaker 1: is inevitable. [00:10:40] Speaker 1: Market declines [00:10:41] Speaker 1: are inevitable. [00:10:43] Speaker 1: Economic uncertainty [00:10:46] Speaker 1: is inevitable. [00:10:48] Speaker 1: But abandoning abandoning a sound investment strategy [00:10:52] Speaker 1: in response to temporary fear [00:10:54] Speaker 1: can have lasting consequences. [00:10:57] Speaker 1: Throughout history, [00:10:59] Speaker 1: investors have repeatedly faced uncertainty. [00:11:04] Speaker 1: Those who remain disciplined, patient [00:11:07] Speaker 1: patient, and focused on their long term goals have often been rewarded. [00:11:12] Speaker 1: Successful investing isn't about predicting the future. [00:11:16] Speaker 1: It's about preparing for it. [00:11:19] Speaker 1: And one of the Best ways to prepare [00:11:21] Speaker 1: is having a plan that helps you stay invested [00:11:24] Speaker 1: when emotions [00:11:25] Speaker 1: encourage you to do otherwise. [00:11:28] Speaker 1: Until next time, stay focused, [00:11:31] Speaker 1: stay informed, [00:11:32] Speaker 1: and most importantly, [00:11:34] Speaker 1: stay committed to your long term goals. [00:11:37] Speaker 1: Thanks for joining me on this episode of Wealth Grow. [00:11:40] Speaker 1: If you found this helpful, please subscribe and leave us a [00:11:45] Speaker 1: Got questions or a topic you'd review. like us to cover? [00:11:48] Speaker 1: Reach out on social media or at Whartonic@CeteraNetworks.com. [00:11:54] Speaker 1: Thanks for listening, and until next time, plan wisely,[00:11:59] Speaker 1: invest smartly, [00:12:00] Speaker 1: and build a legacy that lasts. [00:12:03] Speaker 1: These podcasts are brought to you by Wharton Investment Consultants, [00:12:07] Speaker 1: 5010 Camby Drive, Wilmington, Delaware [00:12:11] Speaker 1: 19808. [00:12:13] Speaker 1: Telephone, (302) [00:12:15] Speaker 1: 239-2111. [00:12:18] Speaker 1: Securities are offered through Setera Wealth Services LLC, [00:12:22] Speaker 1: member FINRA SIPC. [00:12:24] Speaker 1: Advisory services are offered through Setera Investment Advisors LLC, [00:12:29] Speaker 1: a registered investment adviser. [00:12:32] Speaker 1: Cetera is under separate ownership [00:12:35] Speaker 1: from any other named entity. [00:12:38] Speaker 1: The views depicted in this material [00:12:40] Speaker 1: are for information [00:12:42] Speaker 1: purposes only and are not necessarily those of Cetera Wealth Services LLC. [00:12:48] Speaker 1: They should not be considered specific advice [00:12:51] Speaker 1: or recommendations for any individual. [00:12:54] Speaker 1: Neither Cetera nor any of its representatives [00:12:57] Speaker 1: may give legal or tax advice. [00:13:01] Speaker 1: The opinions contained in this material are those of the author and not a recommendation [00:13:06] Speaker 1: or solicitation to buy or sell investment products. [00:13:10] Speaker 1: This information is from sources believed to be reliable, [00:13:13] Speaker 1: but Sentara cannot guarantee [00:13:15] Speaker 1: or represent that it is accurate or complete. [00:13:19] Speaker 1: All investment strategies involve risk [00:13:22] Speaker 1: and do not guarantee results. [00:13:24] Speaker 1: Please consult a financial professional [00:13:28] Speaker 1: regarding your individual [00:13:30] Speaker 1: situation.