By Norman MacQueen, MBA
Whether you’re a new investor or a veteran, market volatility is challenging for everyone. There’s no singular way to navigate turbulent times, but an iconic quote from Warren Buffett comes to mind: “Be fearful when others are greedy, and greedy when others are fearful.”
Following the crowd isn’t necessarily a sound strategy for shielding all you’ve built. Here’s a look at some key points to remember in today’s unpredictable market.
How Volatility Can Add Value to the Discipline of Dollar-Cost Averaging
For many (if not most) people, money and emotion are at least somewhat entwined. However, if you let emotion influence your investment decisions, you may have a harder time building wealth.
Dollar-cost averaging (DCA) is a strategy that helps take the emotion and the guesswork out of investing. It involves making periodic investments of the same amount of money over time. When you do this, you naturally buy more of a given investment when the price is low and less when the price is high.
Dollar-cost averaging lowers the average price per share over time. It also reduces the temptation to “time” the market, a reaction that often does more harm than good during periods of volatility. I’ve found that in many cases, a long-term, disciplined approach to investing wins out.
Remember: The Market Historically Has a Bias to the Upside
During periods of market volatility, investors tend to become more cognizant of risks. However, you shouldn’t lose sight of the fact that historically, the market trends upward overall. Bull markets historically happen more frequently than bear markets, and after a bear market, returns usually recover relatively quickly.
So why does the market tend to move upward? Several factors shape this phenomenon, including the following:
- Risk premiums (extra returns for riskier investments)
- Overall economic growth
- Money creation by central banks
When you’re in the midst of extreme market volatility, we recommend avoiding panic selling (or panic buying). Sticking with your existing investment strategy is often safer; and remember that historically, each time the market has come down, it has eventually come back up.
When It Comes to Market Volatility, When Should You Worry?
This isn’t to say there’s never a good reason to worry when the market is unstable. There are some circumstances when you might have reason to worry (and more importantly, there are times when you might have reason to reshape your investment strategy).
Situations That Often Do Not Require Changes
Many investors automatically start fretting when market volatility sets in. It’s natural to be a little concerned, but often, there’s no need to worry. Many of my clients get anxious in the following situations:
- When the market is at historic highs and ripe for a correction
- When the market is way down and might drop even further
In these situations, I frequently tell my clients that they don’t need to worry, they just need to stick to their plan.
When Market Volatility May Call for a Strategy Review
Many times, those who worry most about market volatility are those who don’t have a plan. But if you don’t currently have a plan to manage your investments, it’s not too late to make a change. At Thrive Wealth Management, we work with each client to develop a strategy for sustainable wealth.
Let Us Help You Navigate Market Volatility
At Thrive Wealth Management, LLC, we believe there’s no one-size-fits-all strategy for investment management. Each client has unique circumstances and goals, and we build an individualized strategy based on that.
If you’re concerned about market volatility and don’t currently have a plan to navigate it, we’re here for you. If you have questions about how we may be able to help you, contact us online today. To schedule a meeting, call (215) 376-5530 or email norman@thrivewealth.com.
Frequently Asked Questions
How should investors think about market volatility within a long-term financial plan?
Market volatility is a normal part of investing and, in our experience, is best evaluated within the context of a long-term financial plan. Rather than focusing on short-term market movements, investors can often benefit from understanding how volatility fits into their overall goals, time horizon, and risk tolerance. A firm like Thrive can help clients review their plan during volatile periods to keep strategies aligned with long-term objectives.
When does market volatility warrant a review of your investment strategy?
A review may be appropriate when market volatility occurs alongside changes in your personal or financial situation, such as retirement timing, income changes, or evolving cash-flow needs. Volatility can also reveal portfolio concentration or allocation imbalances. These moments often serve as practical checkpoints to confirm that your investment strategy continues to support your broader financial plan.
How can a financial advisory firm help during periods of market uncertainty?
During periods of market uncertainty, an advisory firm can provide objective analysis and guidance to help investors evaluate their options without reacting emotionally to market headlines. Thrive works with clients to assess portfolio positioning, consider tax and planning implications, and make informed decisions that support long-term goals rather than short-term reactions.
About Norman
Norman MacQueen, MBA, is a Financial Advisor at Thrive Wealth Management, LLC, a boutique financial planning firm in Blue Bell, Pennsylvania. Norman brings more than 35 years of experience helping clients pursue their financial goals with confidence. In his role, he guides clients through the iThrive Life Planning Process™, combining his investment expertise with a holistic approach to planning. Known for his trustworthiness, deep experience, and sincere desire to help others, Norman has built decades-long relationships with his clients and their families that remain the most fulfilling part of his career. His guiding principle is simple yet powerful: help clients achieve their goals.
Norman began his career at Vanguard, where he discovered his passion for investments, later moving to SEI Investments and co-founding a successful advisory firm. He also served as the Chester County Controller from 2014-2017, overseeing payroll, retirement benefits, audits, and financial reporting. He earned his BS in Economics from West Chester University and his MBA in Finance from Eastern University. Norman lives in Wilmington, DE, with his wife, and is a proud father of three and grandfather of seven. Outside of the office, he enjoys spending time with his family and being outdoors—whether boating, fishing, or hunting.
Disclosure:
This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication.
Past performance does not guarantee future results. All investing comes with risk, including risk of loss.
