How to survive (and thrive) in a volatile market


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by Jerry Lynch, CFP, JFL Total Wealth Management

So yeah, the market is volatile. Up a few points today, down a few tomorrow. News is coming from all over the world — some good, some bad. You wake up and something happens in some part of the world that you are barely aware of and it rocks the market and makes everyone have a bad day.

Take a look at this slideshow comparing Time magazine covers and the stock market. I have no idea who did the slideshow, but I call it “But this is different” because that is what everyone would say as they described that event and how it would impact the stock market at that time.

The certainty in life is that there is always uncertainty, change, drama and volatility. Nothing here is new. As you look through these covers, it will probably bring up old memories that you forgot a long while ago. I had a job working in a gas station in the 70s just so my dad could get a tank of gas and avoid the half mile lines. None of this stuff is new and to be financially successful, you need to follow some basic principles.

  • Cash is king! It gives you almost a 0% return but it is the most important part of any financial plan. It saves you when things are bad and allows you to take advantage of opportunities when others are not liquid. When people are panicked, and you have cash, you win! Their fear, emotion and lack of liquidity will provide you with some great long-term deals.
  • The worst and most volatile times are the best times to invest. Anyone who invested through 2008 and remained consistent saw amazing returns on their money. Those that waited for the market to come back will never really recover. Rule one of investing is to buy low and sell high.
  • Consistency pays off. People who “dabble” in things get crushed. I often hear, “I tried real estate once,” or, “I put a little money in that.” They do not need to finish the sentence as I know how it ends… they got destroyed. Remain consistent, learn from your mistakes and make small changes over time. That is how you win this game.
  • Give more. People are scared and need help and reassurance. If you are a business owner, what more can you provide to your clients to help them through these times? That turns customers into clients for life. If you work for a company that may be struggling, provide more leadership and support which will pay off in the end as you will excel when others are floundering.
  • Focus on the process and not the outcome. If the process is good, over time you will get the results that you desire. Invest systematically. Do not take on too much debt. Live below your means. Over time, these processes will make you successful.

All I hear is Chicken Little and “the sky is falling.” People are changing their long-term strategies, operating from emotion and not logic, and destroying their long-terms plans.

If you focus on the basics and do them very well, you will be happy with the results. Let’s not overthink this.

Jerry Lynch is a certified financial planner with JFL Total Wealth Management. He may be reached at ten.h1544823200tlaew1544823200latot1544823200lfj@h1544823200cnyl.1544823200yrrej1544823200 or (973) 439-1190.

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