Pandemic Market Volatility Assistance Program

The coronavirus pandemic isn’t just a health crisis — it’s also an economic one. The stock market has been extremely volatile in recent weeks, with massive swings in both directions. This roller coaster is not only stressful for investors, but it also makes it difficult to figure out how to respond. Should you buy or sell stocks? Are your savings secure? How can you ensure that your retirement plans stay on track? If these are questions that have been on your mind, know this: You’re not alone.

“It’s going to be a bumpy ride. We’re in the middle of a pandemic recession, which is bad enough, but the Federal Reserve and Congress are not only fighting the virus but also fighting the economic impact that’s been caused by the quarantine,” said Christopher B. Brown, a certified financial planner with Social Security Solutions Inc.

“It’s going to be a bumpy ride. We’re in the middle of a pandemic recession, which is bad enough, but the Federal Reserve and Congress are not only fighting the virus but also fighting the economic impact that’s been caused by the quarantine,” said Christopher B. Brown, a certified financial planner with Social Security Solutions Inc. “The markets are down because people aren’t spending as much money and they’re worried about what’s next.”

Brown says there are some simple ways you can prepare for these economic challenges:

• Make sure your emergency fund is in place (at least three months’ worth of living expenses).
• Start tracking your spending habits so you know where to cut back if necessary.
• Invest in gold or silver coins if you want something tangible as an investment vehicle.

“That’s what you’re seeing in the stock market right now: The market is trying to figure out how bad things are going to get and when we might see some improvement.”

The stock market is a reflection of the health of the economy. And this can be a good or bad thing, depending on what you’re looking at. If you’re looking at your own investment portfolio, it’s probably not so great right now because people are selling stocks in order to raise cash and stay afloat during times like these. But if you look at how the stock market behaves as a whole—and how it compares with other indicators like GDP growth or unemployment rates—you’ll see that it acts as an early warning system for financial crises and recessions.

The bottom line? The stock market isn’t always a harbinger of doom and gloom; sometimes it just gives us advance notice about something we might not otherwise have been able to predict (like an economic downturn).

“If you want to hold stocks, then you have to be willing to accept the possibility that prices will go down 25 percent or more in a month,” he said.

If you want to hold stocks, then you have to be willing to accept the possibility that prices will go down 25 percent or more in a month. But if you’re willing to do that and can handle short-term volatility, then it’s not such a bad deal.

The best way to manage your portfolio during a downturn is with diversification and a long-term investment strategy. Diversifying across different asset classes helps spread out risk, but also consider how much of each type of investment (stocks, bonds) you should be holding in order to meet your goals. The other thing that’s important is having an overall financial plan so that when things aren’t going well for one particular asset class (like stocks), it doesn’t derail your entire portfolio because there are other parts of it doing well elsewhere (like bonds).

During a long-term bull market, investors can afford to ride out short-term hiccups because the market tends to rise over time, said Goldstein.

• You may be tempted to think that the market is always going up, but that’s a dangerous assumption. While it’s true that most of the time markets go up, they can and do go down as well (and occasionally they even stay flat).
• The best way to avoid being caught off guard by this volatility is by having an investment strategy in place before you invest money in stocks or other assets. This will help you manage your risk by limiting how much money you lose when there are downturns in the market. For example, if you have a $50k annual income from working at home and your goal was to save up enough money for retirement at age 65 without touching any of those savings until then (which would take about 30 years), then investing $500 per month over those 30 years would allow for plenty of growth opportunities with minimal risk since it won’t affect your ability to pay bills or buy groceries during those years as long as inflation stays relatively low during that time period which means less inflationary pressure on prices throughout every year so hopefully we’ll never see anything like what happened during 2008 where food prices skyrocketed due to skyrocketing oil prices; however if inflation were high enough then there’d still be concern about whether our wages would keep up with rising costs thus making everything more expensive including housing which could lead some people into foreclosure because they couldn’t afford their mortgage payments anymore even though they were paying off their loans either through principal reduction programs (where banks reduce amount owed)

Investors who have a long time horizon — a decade or so — shouldn’t feel compelled to make changes, financial experts say.

For investors with a long time horizon — a decade or so — shouldn’t feel compelled to make changes, financial experts say. Investors who are concerned about the volatility in the market may be able to hedge against it by buying put options on their holdings.

In contrast, for investors who have a short time horizon — three years or less — and invest in the stock market through mutual funds and ETFs (exchange-traded funds), “they should consider selling their positions,” Ricchiuto said.

The way people can view their portfolios during times of volatility is as a bucket of resources that they need for their goals, such as retirement or college savings, said John Luntey, managing partner at Savant Capital Management in Rockford, Ill.

“There’s a lot of things that can be done to help mitigate the situation,” said John Luntey, managing partner at Savant Capital Management in Rockford, Ill. “But there is no guarantee any of these strategies will work.”

If you’re worried about market volatility, the key is not to change your investment plan or strategy because of it. Instead you should focus on what’s important: your goals and financial security over time, Luntey said.

For example, if you need $100,000 for a down payment on a house in five years, then now isn’t the time to sell stocks that have appreciated so they can be used as collateral against an ARM mortgage loan with low initial rates but higher ones later on. Instead keep some cash reserves intact while also maintaining a diversified portfolio based on your risk tolerance and time horizon—the longer the better because stocks tend to be cheapest when investors panic during periods of market stress like this one.”

“When we look at investing with clients and their overall financial plan, it’s typically not something that is going to happen overnight,” Luntey said.

“When we look at investing with clients and their overall financial plan, it’s typically not something that is going to happen overnight,” Luntey said. “If you’re investing for the long term, and you have a diversified portfolio and can tolerate short-term volatility, then this is an excellent time to be looking at the market.”

That’s because while companies are trying to figure out how they’ll respond to the new regulations, investors will benefit from the resulting lower prices.

In times of market volatility, it’s important to take a step back and review your long-term financial plan. Instead of attempting to time the market, investors should focus on whether their portfolios match their risk tolerance and time horizon. If you’re concerned about your portfolio or have questions about how to manage it during volatile times, consider enlisting the services of a financial advisor.