April 8, 2020

5 Tips for Navigating the Coronavirus Crash

When stock markets experience sudden downturns, investors can feel anxious and make
decisions detrimental to their long-term goals. After all, when you’ve worked hard for the
money, it’s painful to see your account balances drop. This is a natural reaction, even with savvy
investors who’ve experienced market volatility before. These extremes are enough to test your
nerves.

Now is not the time to panic and change your investment strategy. This is the time to stay level-
headed, maintain perspective, and focus on the long-term. We recommend the following five
strategies to help you navigate this challenging time:


1. Remember the “pot of gold.”

Downturns are not rare events and statistics favor staying the course. The data below speaks
volumes, showing in the year following the trough (low point) of a bear market, the returns were
on average 47%. This is the “pot of gold” waiting for you at the end of this inverted rainbow.

2. “Unfriend” the financial news.

When the markets are volatile, the news cycles never end. To be clear, you do want to be
knowledgeable about what’s happening in your portfolio, but you don’t want to overdo it. You
don’t need hour-by-hour updates on your investments any more than you need hour-by-hour
updates on your favorite sports team. Watching more closely doesn’t improve the results.
Consider limiting the financial information you receive by social media, TV, and newspapers.
Regardless of the medium, they thrive on negativity and these bits of information have a
cumulative effect. The more you absorb it, the more you risk anxiety, fear, and even panic. As
any good financial advisor will tell you, panic leads to more losses than volatility.


3. Leverage your “financial foursome” in times of stress.

Investing in the stock market involves risk. We all know that going in, but it’s only truly tested
when the markets become volatile. It’s normal to feel anxious, concerned, worried, or even
fearful. This is precisely why you want to work closely with your “financial foursome,” which
includes your CPA, your estate attorney, your mortgage broker, and your financial advisor.
Each of these professionals provides a different perspective, not only for capitalizing on
opportunities but also for keeping yourself level-headed. If your “financial foursome” is lacking

in some area, leverage your financial advisor for recommendations. They are likely well-
connected to the best providers in the area.

4. Take your investment strategy from “vapor to paper.”

If you want to stay on track with your investments, regardless of what the markets are doing, you
should commit them to writing. An Investment Policy Statement (IPS) is a document drafted
between you and your financial advisor that outlines general rules for meeting your investment
objectives. It includes criteria for monitoring performance, addressing risk, and communication
between you and your advisor. Your IPS should also include a provision explaining when you
should rebalance your portfolio. Without written objectives and guidelines, your investments are
subject to the whims of your emotions, and how you “feel” you should be investing.
5. Re-assess your “financial pain tolerance.”
You probably took a risk tolerance questionnaire with your advisor years ago and maybe long
forgot about it. Now is a great time to go through this exercise again. You’re older now, your life
has changed, and your risk/pain tolerance likely has as well.
Many factors contribute to individual risk tolerance, including age and short- and long-term
financial goals. Volatility can present the perfect opportunity to rebalance. Work together with
your advisor to find the ideal balance of investments to suit your comfort level.

Final Thoughts

Remember, now is a moment to be cautious, not a moment to panic. If you’ve worked hard with
your financial advisor to create a financial plan, stick with it. Historically, recoveries have
rewarded patience. If you’re thinking about timing the market, remember that knowing when to
get out is only half the battle; you also need to know when to get back in. Staying invested for
the long term is far more likely to yield a favorable outcome.
If you’re concerned about recent volatility and have not heard from your current advisor, contact
us to schedule a complimentary second opinion. We can review your current investment strategy,
portfolio, risk tolerance, and Investment Policy Statement and decide if any changes are
necessary. We’re here to help.

References

Tools for Navigating the Coronavirus downturn
https://advisors.vanguard.com/insights/article/toolsforsurvivingthecoronavirusdownturn?cmpgn=
FAS%3AOSM%3APSM%3A673017799425
5 Investing Do's and Don'ts To Deal With Stock Market Volatility
By Lynnette Khalfani-Cox - https://www.ebony.com/career-finance/5-investing-dos-and-donts-
to-deal-with-stock-market-volatility/
Before You Get Out of the Stock Market, Read This
https://www.forbes.com/sites/ericroberge/2020/03/17/before-you-get-out-of-the-stock-

*Investors cannot directly invest in indices. Past performance does not guarantee future results. 

Investments in securities do not offer a fix rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.