Market Volatility Returns in 2022: What it Means For You
A Message From Our CFO
It’s been a while since we’ve sent out a message to our clients regarding the stock market. That’s usually a good sign. While we tend to update you at your regular check-in meetings with your advisor, lately we’ve seen considerably positive movement in the various stock market indexes and recently reached record highs in the S&P 500 and the Dow.
Therefore, we haven’t felt a need to send you a mass email shouting from the rooftops, “You’re killing it in your investment accounts!” In fact, the last time you probably heard from us with a message about the market was during March 2020 when a global pandemic crashed many of our dreams of a great year. Our message then is the same as it is now, “Don’t panic. If you feel like you’re about to panic, give us a call or shoot us an email.”
This should teach you a valuable lesson: just because you’ve made a bunch of money investing, doesn’t mean you’re exempt from seeing your accounts drop. For many investors in their 20s and 30s, you’ve never experienced much of a downturn in the market until March of 2020. And even then, it lasted about a month. Many of us remember how the 2008 market crash made us feel and what it did to our retirement accounts for a period of time.
Despite a couple of challenging years for our country, the US stock market hit record highs in January. If you and your advisor have chosen to be anywhere from moderate too aggressive over the last few years, you’ve probably been pleased with your statements as of late.
Now, here we are and it’s 2022. In January, the S&P 500 dropped 5.9%, the Russell 2000 went down 10.2%. With talk of inflation, interest rate spikes, home values through the roof and your brand new dish washer and new windows on back order until May, it’s easy to feel uneasy. We’re here to tell you that staring at your account balances can drive you insane in times of volatility. But it’s also a time to appreciate how far you’ve come. If your investment account balances dropped in January, raise your hand. Congratulations, you’re alive. In order to feel alive while investing, you have to take your lumps. That’s the risk that you take. The market doesn’t just go straight up.
We do not have the crystal ball that tells you when the market has peaked or when the market will drop, or when the best time is to put all the cash you’ve stored up in savings to work in investment accounts. We can’t tell you who will win the next presidential election, what interest rates will be 4 years from now, or whether this pandemic will be over and a thing of the past by the holidays. What we can do is help keep you grounded, settle you down, and help you make good decisions that aren’t driven by emotions: mainly fear and greed.
So if you’re feeling a bit uncomfortable with the market having dropped in January, you should take one action: email or call your advisor to check in. Your strategy is unique to you. It’s not the same as your neighbor’s, your sibling’s, or your coworker’s. We know you and your finances better than those around you do. We can help you decide whether to make adjustments or stay put and encourage you to relax and sit through whatever is to come. While we can’t predict what comes next, we’re here to help you make smart decisions.