How To Thrive in Turbulent Markets
» by Chad Leatherwood, CFP®, Wealth Advisor
Turbulent markets create dangerous investing conditions. The increased threat of financial loss causes some investors to act irrationally and make decisions that negatively impact their long-term financial security. Behavioral economics refers to this aversion to loss as prospect theory, which suggests that losses carry significantly more weight than gains. Because the stock market experiences unpredictable periods of regression, having a plan in place to survive economic downturns protects your assets when a recession hits. Read more about how to survive in recession times and how Summit Wealth Partners helps clients thrive in turbulent markets.
Tips for Surviving an Economic Downturn
Keep Emotions in Check
It’s easy to panic during economic downturns, but it’s important to remember that bear markets are temporary. In fact, bear markets have historically lasted significantly shorter than bull markets. The average bear market length is 10 months, while bull markets last over two years. Abandoning your position during a bear market means you’ll likely miss out on gains when the market corrects itself. Selling only locks in losses, and market gains consistently outperform setbacks.
Diversify Your Portfolio
Maintaining a balanced portfolio of stocks, bonds, and money market funds reduce your exposure to turbulent markets. Finding investments that react differently to market fluctuations stabilizes your investment holdings. Also, consider investing in recession proof companies; these are companies that typically see minimal losses during difficult economic times and include:
Freight and Logistics
Personal travel decreases during recession times, but major industries still need to ship products worldwide. This means that major logistics companies continue to operate even when the economy is down, making them a safe bet to enhance your investments.
Service and Repair Companies
Businesses and households limit spending on new items during difficult economic times, meaning the service and repair industries see an increase in business. Investing in companies that offer routine maintenance or manufacture DIY tools can enhance a portfolio.
During the 2008 economic recession, Dollar General was the leading S&P 500 stock, providing 60% returns which nearly doubled the second-highest stock. Consumers still need to purchase items during economic downturns, but they change where they buy them. Adding discount retail stores to your investment portfolio allows you to counter any losses from high-profile companies.
Focus on Fundamentals
Focusing on fundamentals helps you survive economic downturns by providing reminders about long-term goals and approaches. Fundamental analysis means reviewing your cash flow, asset returns, and future growth potential to assess your financial health. Reviewing your long-term plan allows you to see the gains you’ve seen and provides confidence that the good times will return soon.
Seek Professional Advice
Protecting your wealth during economic recessions is complex and seeking the help of a wealth management professional provides value. Working with an advisor helps provide clarity to your financial plan because they provide unbiased views of your portfolio’s performance.
How Summit Wealth Partners Helps Clients Thrive in Turbulent Markets
At Summit, we understand that disciplined investing and exceptional service help investors thrive in turbulent markets. Our advisors help our clients reach their financial peak by offering the following services:
Unpredictable markets and changing laws make financial planning important for long-term security. Our advisors help you achieve your goals by providing the highest standard of planning services and making adjustments when necessary. We offer our clients the chance to own their financial future by providing them with a client planning portal that delivers up-to-the-minute updates on their portfolio’s performance.
Having a trusted Summit advisor on your side helps you survive in recession times by bringing clarity to your finances and helping you focus on what’s most important. Our investment committee uses an evidence-based approach and state-of-the-art technology to develop long-term success for our clients. By combining our experience, services, and innovative approach, we’re equipped to deliver a personalized wealth management experience that helps our clients reach their goals.
Business Recession Survival
Our team understands that it’s not just investors that need recession survival strategies; that’s why we offer business solutions that allow owners to avoid critical mistakes and add to their bottom line. Keeping businesses thriving in turbulent markets is our priority, and we have 20 years of experience to help guide your company.
Contact Summit Wealth Partners to learn more about our strategies that help clients thrive in turbulent markets.
Want to Protect Your Assets From the Next Recession?
Thriving in turbulent markets begins with proper planning. Contact Summit Wealth Partners for a free consultation and start the process today.