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What To Do During Market Volatility

What To Do During Market Volatility

| September 22, 2020

By now it should be common sense to expect the unexpected. But to say the events of 2020 were unexpected is an understatement. No one likes unpredictability, especially when it comes to money; and because one of the major effects of the coronavirus pandemic has been increased market volatility, if you invest in any way, shape, or form, you’ve likely been experiencing some worry (to put it mildly). 

Yes, from the upcoming election and COVID-19 to social unrest, volatility has become the norm. But rather than fear ups and downs, do what you can to prepare for them. Let’s discuss a few actions you can take to help you weather this storm and prepare for the next.

Control Your Emotions

First, let’s talk about what you shouldn’t do. One of the most important rules in investing is to refrain from making emotional decisions. Multiple studies have analyzed how our emotions affect our investing results, especially when we chase above-average returns. A 2018 DALBAR study revealed that investors’ decisions were the biggest reason for underperformance. (1) Simply put, behavioral biases lead to poor investment decision-making.

You also don’t want to start making major changes to your account in anticipation of a downturn. Erring too much on the side of caution too many years ahead of retirement may prevent you from gaining the potential returns you need to retire on your terms. For example, in a panic, some investors may sell stocks and pursue safer investments like annuities, bonds, and cash. 

Instead, relying on an experienced professional to help you understand your options and control the risk you take with your retirement money will allow you to react unemotionally to a rising and falling stock market—instead of guessing what to do next. 

Diversify Your Investments

In the 1990s, investors placed their money heavily into the early e-commerce sites, and when that bubble burst, it birthed what is now famously known as The Dotcom Crash. (2) When people were losing faith in the stock market, they looked at real estate as well as their own homes as the place to focus their sights (and money) on. However, the constant speculation and unsustainable rise in home values eventually led to the Housing Market Crash of 2008, (3) and eventually bled into the Great Recession. If history teaches us anything, you never want to put all of your eggs in one basket as it’s never a guarantee that the basket will never fall. 

Instead, diversify your portfolio with a combination of different investment sources. Modify your portfolio to include stocks of varying risk levels (safe, moderate, and high risk), and spread your money out between stocks, bonds, funds, and investments in different sectors. This way, you can seek to minimize the impact that any one losing investment can have on your overall portfolio performance. (4)

Diversify Your Income

Economic downturns often go hand in hand with job instability. So, in addition to diversifying your investments, consider diversifying your income sources as well. Besides your salary, consider where other sources of income can and will be coming from. This might mean investing in rental real estate or other income-producing investments such as higher-yielding stocks and bonds. (5)

Prioritize Your Emergency Fund

This strategy is all about preserving the wealth you’ve accumulated to this point. While cash investments may not provide a lot of growth, having a cash contingency fund with at least 6 months of living expenses will protect you against having to sell investments at low values to free up cash. Examine spending patterns and find ways to tuck away even more into cash or cash equivalents, such as short-term bonds, certificates of deposit, or Treasury bills.

Don’t Go It Alone

Whether you’re new to the stock market or an experienced investor, the more you understand about the economy and how market cycles affect your financial situation, the more equipped you will be to handle these tumultuous times. Our team at Whittenburg Wealth Partners is here to help calm your emotions by providing you with an objective review of your portfolio and an examination of how current events affect your long-term outlook. 

Are you ready to see all your options for protecting your money and setting it up to succeed in any market environment? If you think our firm would be a good fit for your financial needs, easily schedule a no-fee, no-obligation virtual appointment or contact us at 801-839-7050 or

About Austyn

Austyn Whittenburg is a wealth planner and partner at Whittenburg Wealth Partners, a family-owned and family-operated financial and wealth management firm located in Salt Lake City, Utah. Austyn has 7 years of experience as a wealth planner and spends his days helping business owners, emerging successful families, and their ensuing generations simplify their financial lives and discover meaningful solutions. Austyn received a Bachelor of Science in Finance from Brigham Young University and holds the Certified Financial Planner™ (CFP®) and Certified Business Exit Consultant (CBEC®) credentials, his FINRA Series 7 through LPL Financial and 66 registrations through LPL Financial and Stratos Wealth Partners, and his life, health, disability, and annuity insurance licenses. Austyn is active in his community of Herriman, Utah, where he resides with his wife, Ciera, and two young sons, Grayson and Graham.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Securities offered through LPL Financial, member FINRA/SIPC.  Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor. Stratos Wealth Partners, Ltd. and Whittenburg Wealth Partners are separate entities from LPL Financial.





(4) There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. 

(5) Bond yields are subject to change. Certain call or special redemption features may exist which could impact yield.