Questions investors should be asking advisors during market volatility

Planning for Volatility

If you have questions during market volatility, you’re not alone. And while market swings can feel unsettling, they are not unusual. 

Since 1980, the S&P 500’s average drawdown in a given calendar year has been over 14%. Yet it’s still finished positive roughly 75% of the time, with average annual returns near 11%. That gap between short-term drops and long-term outcomes is where many investors get tripped up.

Emotions can, understandably, take over during downturns. Fear can push investors to sell at the wrong time or abandon long-term plans, creating a potentially costly mistake. 

A disciplined approach matters more during volatile periods than stable ones. Staying focused on long-term goals, rather than short-term headlines, is what separates durable strategies from reactive ones.

Staying Invested

Pulling out of the market during a downturn may feel like protection. In reality, it can limit recovery, which is why many advisors operate on the offensive during periods of volatility. 

Historically, after declines of 20% or more, markets have delivered average returns of about 107% over the following five years. Missing even a portion of that rebound could materially impact long-term results.

Volatility can also create opportunity. Lower valuations may allow investors to add to positions or rebalance portfolios at more attractive entry points. In these moments, having a plan can lead to swift action, rather than hesitation. 

Rebalancing is another key tool. Market swings can shift your asset allocation away from its intended target. Bringing it back in line helps manage risk and maintain alignment with your goals.

Adjust Rather Than React

As retirement approaches, volatility can feel more personal. But going too conservative too quickly can create a different kind of risk.

A portfolio that lacks growth may struggle to keep up with inflation or rising expenses, especially healthcare and long-term care. In some cases, maintaining or even slightly increasing equity exposure, in a measured way, can support long-term income needs.

Flexibility is critical, too, since small changes can preserve larger goals. That may mean adjusting spending, delaying major purchases, or revisiting timelines. 

Liquidity can also play a key role in how you handle volatility. Having sufficient cash on hand can reduce the need to sell investments during downturns, creating breathing room when markets are under pressure. 

During periods of volatility, the difference between success and failure often comes down to how an investor makes decisions under pressure. Staying invested, making thoughtful adjustments, and maintaining perspective can turn short-term uncertainty into future progress and stability. If you would like to discuss investment strategies during periods of volatility, contact Griffin Asset Management to speak with an expert today.

Source:

Merrill: Questions to ask an advisor when markets get volatile