Perspective on Market Volatility

As you have seen on the news, financial markets have been extremely volatile lately as the global economy worries about the impact of COVID-19.   Market conditions were made worse by the shock of lower oil prices resulting from the Saudi Arabian and Russian oil price war.

Most of the past major market corrections have resulted from uncertainty in the markets, and with uncertainty comes fear, but we’ve seen markets behave this way before and inevitably the markets have survived and recovered over a medium term. Corrections are a natural part of the investment cycle and over the long term, investors who stay invested are usually better off in the long run.

What are the steps to take in these times of economic shock?

1. Be calm, don’t make drastic changes.  Making decisions when at a heightened emotional state is never the best time.  Unless your goals have changed, continue to stay on your long-term plan.

2. Invest regularly.  By dividing your contributions over time, for example, a monthly or biweekly contribution allows you to purchase cheaper shares when stock prices are at a yearly low and lets you benefit when markets eventually recover.  No one is able to time the market, so benefit from spending more time in the markets.

3. Review your true tolerance.  When markets are going up, most investors don’t mind volatility, but the opposite when markets are going down.  Now is the time to think if you can really handle your stated level of risk. If your financial goals have recently changed, it is important to let me know, so we can review your portfolio to make sure it is right for you.

4. Have a financial plan.  Plans allow you to see different scenarios in advance and help you realize your long-term goals. Plans give you the confidence and peace of mind over short term market changes.

5. Take some time away from the news and social media.  It’s great to be aware of what’s happening but it’s also extremely confusing to be bombarded with conflicting information.  Instead try to focus on personal well-being by picking up on your favourite hobbies, getting some exercise or (finally) enjoy the sunshine.

As always, please call me if you have any questions regarding your investments and the current market conditions. As your CSCU Financial Advisor, I look forward to helping you reach your long-term financial goals.

Phi Hoang, CFP
Manager, Financial Planner
Community Savings
Mutual Funds Investment Specialist
Credential Asset Management Inc.

Mutual funds and related financial planning services are offered through Credential Asset Management Inc.
Meet Phi