As Savant Financial Advisor Ed Cruickshank wrote a couple of years ago, “Our old friend volatility is back.” Recently, the Dow fell off a 900-point cliff for its worst one-day loss since the height of the COVID pandemic, and it continues to bounce around amid news of increasing interest rates, corporate earnings, Elon Musk’s purchase of Twitter, and COVID lockdowns in China. While April often brings a breath of fresh spring air to investors, it can also knock the wind out of you if you aren’t careful.

If the headlines are scaring you a little bit this week, you may get some cheer from viewing this hopeful chart from Dimensional Fund Advisors. Entitled, “The Rewarding Distribution of U.S. Stock Market Returns,” the graphic follows index returns from 1926 through 2021, and documents that – despite some scary market dips over the years, the US stock market posted positive returns in 75% of the calendar years during that 94-year span.

Staying Calm When Markets Fluctuate

Good savers always hate to see markets eroding the wealth they’ve worked so hard to build. However, sometimes the financial media may amplify the perceived seriousness of a market event and what it could mean for the future. Those with nervous tendencies need to remember that despite some temporary setbacks, capital markets have rewarded disciplined investors over time. So if the financial news this week has you wondering whether you should react quickly, we have some “mantras” to help you stay calm.

#1 “I’m staying in my seat.”

We all know that market ups and downs can feel like a rollercoaster ride. If you were on an actual rollercoaster, though, and it took off like Kingda Ka, you probably wouldn’t go jumping out of your car the moment things turn scary. Chances are, you’d hang on with white knuckles and try to make it to the end without losing your lunch! Resolve to keep your white-knuckle grip on your portfolio even when pundits predict a corkscrew ahead. Take a deep breath and repeat: “I’m staying in my seat. I’m staying in my seat. I’m staying in my seat.”

#2 “Doing nothing is doing something.”

When we’re feeling a bit panicky, it’s natural to want to take action. But doing nothing may be the best reaction to a market event when you realize that over your lifetime as an investor, you’ll likely experience multiple periods of short-term volatility. Just think of recent memory: the tech bubble burst in 2000, the events of September 11, 2001, The Great Recession of 2007-2009, and the start of COVID-19 in 2020. Remember, to successfully time the market during events like these, you’d have to be right twice – you’d have to correctly choose when to leave the market AND correctly choose when to get back in. If you’re tempted to take action during a period of market volatility, stop. Take a deep breath (or three) and tell yourself: “Doing nothing is doing something.”

#3 “No mo’ FOMO.”

Fear of missing out, or FOMO, happens when markets begin to rebound and investors trade one form of anxiety (losing money) for another (missing out on the upside). But staying disciplined during market crises means you’ll never have to make that choice, because when the rollercoaster starts its climb, you’ll still be in your seat! While it may make sense to rebalance your portfolio so you can maintain the weighting of your asset classes, you won’t have to worry about market timing. “No mo’ FOMO” is also an effective mantra to recite when you see a meme stock, like GameStop, taking off. Remember, what goes up must come down …

#4 “It’s a marathon, not a sprint.”

Dealing with uncertainty is one reason why investors earn a return over time. If you can keep your expectations realistic, take a long-term view of the markets, and focus on why some investments have higher expected returns, you’ll be better prepared in the event of any market downturn. If you play the long game, you’re in a better position to earn a return over time.

#5 “This too shall pass.”

Did you know that this was apparently Abraham Lincoln’s favorite saying? According to the Daily Stoic, Honest Abe recited this mantra whenever the going got tough. He reportedly said that “This too shall pass” was applicable in any and every situation one could encounter, so why not apply it here?

300 Million Yogis Can’t Be Wrong!

TheGoodBody.com reports that an estimated 300 million yoga practitioners exist around the world. Many find that chanting a mantra can be an effective way to activate a certain energy and heighten awareness in a powerful way. While we’re no experts, chanting these financial mantras may help you relieve a little stress and help keep you focused during episodes of market volatility. Hey, if it worked for Abraham Lincoln, who are we to judge?

About Savant Wealth Management

Savant Wealth Management is a leading independent, nationally recognized, fee-only firm serving clients for over 30 years. As a trusted advisor, Savant Wealth Management offers investment management, financial planning, retirement plan and family office services to financially established individuals and institutions. Savant also offers corporate accounting, tax preparation, payroll and consulting through its affiliate, Savant Tax & Consulting.

©2023 Savant Capital, LLC dba Savant Wealth Management. All rights reserved.

Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. Past performance may not be indicative of future results. This is intended for informational purposes only and should not be construed as personalized investment advice. Past performance is no guarantee of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments and/or investment strategies recommended and/or undertaken by Savant, or any non-investment related services, will be profitable, equal any historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Please see our Important Disclosures.