Troubled By The Turbulent Financial Market
Unless you’ve been orbiting the earth in the international space station, you’ve probably heard the latest news about the turbulent global markets. China’s Shanghai Composite Index lost more than 11%, oil prices are continuing to drop and the U.S. stock market has taken a big dip. For the average investor, it’s hard not to panic and make fear-driven decisions.
To spare you from all the anxiety and poor decision making, we’d like to provide some perspective and a little advice to help you deal with the market headlines.
First off – know that there is nothing abnormal about what is going on. Fluctuation is what markets do. There’s a lot of talk about a "correction," but there’s no official marker established to signal the situation.
Secondly – do yourself a favor and turn off the 24 hour news. Fixating on any situation, from the stock market decline to that pimple on your nose, always makes things seem worse than they really are.
Finally – realize that no one really knows what is going to happen next. So, taking investment actions, based on a prediction of what’s to come in the market is fool hardy. Resist the impulse to make decisions based on a temporary situation.
Unless your life circumstances have changed recently, it doesn’t make sense to totally change your investment strategy because of a blip in the market. If your portfolio is built around long-term goals and has a diverse mix of investments, it will weather the storm. Diversification and patience are the best way to guard against market uncertainty.