Home » Amy and Dan Smith »Columns » Currently Reading:

Market Volatility and Your Emotions

August 31, 2011 by Contributor filed under Amy and Dan Smith, Columns No Comments
Amy Smith-BRL

“Market volatility: period when financial instrument prices fall quickly or go up by an unusual amount.” That’s a dictionary definition. Mine is more like the “I’m going to be sick” feeling that usually accompanies a roller coaster ride at my daughter’s favorite theme park. Unless you’ve not been checking your emails, reading newspapers, or watching television (a.k.a. “vacation”), you know it’s been a bumpy ride the last few weeks, and some financial experts say it might be like this for a while.

Here are some things you might want to consider before F.E.A.R. (False Evidence Appearing Real) kicks in:

  1. Don’t Panic: No matter how careful you are, you can neither predict nor control the future. No one has a crystal ball.
  2. Know what you own and why you own it: When the market goes off the tracks, knowing why you originally made a specific investment can help you evaluate whether those reasons still hold and whether a lower price might actually be a buying opportunity. It is individual stocks that determine the market, not vice versa. Buy value, not market trends or the economic outlook.
  3. Tell yourself this too shall pass: The stock market is historically cyclical. There have been a half-dozen previous bear market cycles-declines of 20 percent or more since the early 1970s.* It may take a while, but the market has bounced back every time. Even in the midst of the Great Depression, there were short-term rallies and trading opportunities. In some cases, people built fortunes over time by investing carefully just when things seemed bleakest. Remember, past performance does not guarantee future results.
  4. Have a game plan: Setting predetermined guidelines that recognize the potential for turbulent times can help prevent your emotions from dictating your decisions. If you decide that you need to re-examine your game plan, it should be done with as much care as you put into developing that plan in the first place.
  5. Diversify: Remember that everything is relative. Asset allocation is responsible for most of the variance in portfolio returns. If you’ve got a well-diversified portfolio, it could be useful to compare its performance to relevant benchmarks. Just because a particular index may have dropped doesn’t mean your entire portfolio is down by the same amount. Even when everything seems to be struggling, some asset classes may be struggling less than others. Diversify by country, by industry, by risk. In stocks and bonds, as in much else, there is less volatility in numbers.
  6. Remember your road map: If you feel you need to make changes in your portfolio, there are ways to do so short of a total makeover. For example, each month you could slowly put a set dollar amount into an investment you think is well positioned for the future (known as dollar-cost-averaging). Though all investing involves risk, there are many ways to pursue your long-term investments goals.
  7. Learn from your mistakes: The only way to avoid mistakes in my opinion is to not invest, which is the biggest mistake of all. Forgive yourself for your errors. Don’t become discouraged and certainly don’t try to recoup your losses by taking bigger risks. Instead, turn each mistake into a learning experience. Determine exactly what went wrong and how you can avoid the same mistake in the future. One of the biggest mistakes people make is putting too much money into fixed-income securities. Invest for maximum total real return. This means the return on invested dollars after taxes and after inflation. It is vital that you preserve purchasing power.

So, turn off your television occasionally, be patient, and try not to be too fearful. There will of course be corrections, perhaps even crashes or recessions, but for more than 100 years, optimists have carried the day in the stock market. As the global economy recovers, wealth will increase and stock prices should rise accordingly.

I welcome your comments. Just send me an email at Amy.V.Smith@RaymondJames.com. All names and identifying information will be kept strictly confidential unless written permission is given for their use.

*Source: Stock Trader’s Almanac 2011 © Amy V. Smith
Amy V. Smith Wealth Management, LLC, is an independent firm. Amy is a Certified Financial Planner (CFP) and Certified Investment Management Analyst (CIMA) and offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC. Her office is located at 161 Fort Evans Road, NE, Ste 345, Leesburg, VA 20176.
www.amysmithwealthmanagement.com.
amy.v.smith@raymondjames.com.
The opinions and recommendations here are those of the columnist.

Comment on this article


By commenting, you agree to abide by our Terms of Service.


 

 

 

 

 

 

 

Columns

A Look Into What Is Learned in High School English

Lunde new

By Mary Rose Lunde English is the arguably the most important subject for a student in high school to learn. The most successful people in the world have one thing in common — being able to communicate effectively. This is …

Remembering Nancy Reagan

moore-sobelnewmug

By Samuel Moore-Sobel The passing of Nancy Reagan, a former First Lady who completely transformed the role and helped catapult her husband to greatness, marked the end of an era. Her death also happened to coincide with a turning point …

How To “File and Suspend” Before It Is Too Late

Smith0035

With the recent changes to Social Security rules, filing and suspending will soon be phased out, but there’s still time to take advantage of the strategy. Here’s a quick guide to maneuvering this rule while it still lasts, but as …

Concerned Parent

Michael_Pic

By Michael Oberschneider, Psy.D. Dr. Mike, We are concerned about some habits our nine year old son demonstrates and would love some advice from you.  We are unsure whether it’s anxiety, nervousness, or just nervous/an excess of energy.  A few …

Temple Hall Farm

timjon

I only met the late AV (Val) Symington once; it was a Sunday evening in my first year or two at Wage Radio (this would be the late ‘90’s) and I was putting things in order for the next morning’s …

Am I an Enabler?

Michael_Pic

Dr. Mike, My husband thinks that I’m harming our son for life because of the way I parent. Our son is 12 years old and he was diagnosed with ADHD in the 1st grade. My husband calls me “the enabler” …

Editorial

Grief and Greed

blueridge2

By Matthew Parse What would drive a single individual to cause so much emotional stress and financial burden on hundreds, if not, thousands of families? What would drive the Town …

Op-ed

Oh No, It’s the Christians!

blueridge2

By Nicholas Reid In the hours and days following every massacre perpetrated by radical Muslims, there is one unifying theme across most news coverage of the massacre, wherever it may …

Dear Editor

Campaign of Untruths

jimmerson

Elected officials have done some pretty despicable things while serving in office. They range from bribery, beating a spouse, cheating on a spouse, obstruction of justice, and various forms of …

View From the Ridge

An Open Letter to the Citizens of Purcellville

blueridge2

Mark Your Calendar, They’ve Asked for Our Input So Let’s Give It To Them By Steady and Nobull The Purcellville Planning Commission has tentatively scheduled a series of public input …

Student News

Four Scouts Achieve Eagle Scout Rank

3 Feb 2016

eaglescout

Joel Gicker, Kyle Siecker, Sam Soltis and David Watson achieved the rank of Eagle Scout at a Court of Honor conducted at Blue Ridge Bible Church in Purcellville on January 9. The four Eagles are members of Troop 711 of …

(Be the first to comment)

8th Grade Writers Honored At Blue Ridge Middle School

2 Jul 2015

blueridgemiddleschool

Sixty-seven Blue Ridge Middle School eighth graders have been honored for their writing during the 2014-2015 school year. Many students had their writing selected for publication by Creative Communication, a program for student writers, while others won county-wide writing contests. …

(Be the first to comment)

Ben Kellogg Achieves Eagle Scout

1 Jul 2015

benkellog

Benjamin Robert Kellogg achieved the rank of Eagle Scout at a Court of Honor conducted at St. Andrew’s Presbyterian Church in Purcellville on March 29. Friends, family and troop leaders attended the celebration, including his parents, Robert and Deirdre Kellogg. …

(Be the first to comment)

Calendar

May 2016
M T W T F S S
25 26 27

Hamilton Town Hall

28 29

CHITTY CHITTY BANG BANG at Franklin Park Arts Center

30

Lobster Day with Chef Seb at North Gate Vineyard

CHITTY CHITTY BANG BANG at Franklin Park Arts Center

1

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

Spring Wine Glass Painting with Penny

2

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

3

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

4

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

5

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

6

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

TGIF @ North Gate Vineyard!

7

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

The Sprouted Spoon Food Truck at North Gate Vineyard

Nathaniel Davis Live at North Gate Vineyard

Notaviva Vineyards - Bluegrass Jam - FREE event

8

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

Celebrate Mother's Day at North Gate Vineyard!

Mother's Day Brunch at Breaux

9

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

10

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

11

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

12

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

13

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

14

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

Dog Day at Breaux Vineyards

15

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

16

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

17

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

18

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

19

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

20

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

21

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

22

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

23

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

24

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

25

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

26

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

27

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

28

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

29

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

30

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

31

Sea & Sky – an exhibit by copper artist Anne Jordan and mixed media artist Karen Watson

1 2 3 4

Notaviva Vineyards - Bluegrass Jam - FREE event

PAUL REISLER TRIO WITH LEA MORRIS AND MARSHALL KEYS

5
Current Print Issue:
Sign up for our email newsletter:

Recent Comments

Lifestyle

YMCA of Loudoun County to Hold Job Fair

30 Apr 2016

blueridge2

The YMCA is hiring summer camp Site Supervisors, Sr. Camp Counselors, Camp Counselors, and Jr. Camp Counselors who will work with children ages 5-12 in Loudoun County in our summer day camp programs. Site Supervisors will be responsible for supervising a summer camp program with 30-70 children and for planning, coordinating, and implementing all summer camp activities under the guidelines …

(Be the first to comment)

5K and 10K “Ringing in Hope” Race Slated for Memorial Day

27 Apr 2016

run

The third annual “Ringing in Hope” 5K and 10K race will be held on Memorial Day (Monday, May 30) at One Loudoun. A 1K fun run/walk will also be held. The 5K begins at 8:00 a.m., the 10K at 8:10 a.m. and the 1K at 9:30 a.m. Proceeds will benefit Boulder Crest Retreat, a retreat for America’s seriously wounded warriors …

(Be the first to comment)

Bluegrass Performers Reno and Harrell To Appear at Lucketts on April 23

15 Apr 2016

music note

The Lucketts Bluegrass Concert Series continues its 42nd season of weekly concerts at the Lucketts Community Center on Saturday, April 23 at 7:00 p.m. with a show featuring Reno and Harrell. Tickets are $15 at the door, and the doors open at 6:00 p.m. Hot dogs, barbecue sandwiches, snacks and drinks will be available at the kitchen.

(Be the first to comment)

Around Virginia

Update: Remains Located in Shenandoah National Park; Search Efforts Suspended

VSP Photo - 4-21-16 Whiteoak Canyon Trail Entrance VSP

Update: Body preliminarily identified as Nicole K. Mittendorff, 31, of Woodbridge. The physical and digital evidence collected during the course of this investigation includes a note recovered from the car leads investigators to believe there was no foul play involved in her death. ——————– Search efforts in the Shenandoah National …

(Be the first to comment)

Virginia Trooper Shot and Killed at Richmond Bus Terminal

Tpr Dermyer Patrol Car in front of VSP SPHQ

A Virginia State Police trooper has died as a result of his injuries after being shot on March 31 at the Greyhound Bus station in the 2900 block of North Boulevard in Richmond. At approximately 2:40 p.m., Virginia State Police Trooper Chad P. Dermyer approached a male subject just inside …

(Be the first to comment)

Governor McAuliffe Announces Designation of Four New Virginia Main Street Communities

McAuliffe

Governor Terry McAuliffe has announced the designation of four communities in the Virginia Main Street (VMS) program, administered by the Virginia Department of Housing and Community Development (DHCD). The newly-designated communities include the town of Wytheville, the cities of Danville and Lexington and Gloucester Courthouse in Gloucester County. The communities …

(Be the first to comment)

Sports

Western Loudon Volleyball Club “Hitmen” Team Finishes Second

3 Feb 2016

westernloudounvolleyballclub

The Western Loudon Volleyball Club U14 boys team, called the “Hitmen,” finished second in a tournament held January 17. This is the first ever boys team for the WLVBC (and only the second boys club in the area). Coach Allan Kotmel led the seven-member team. WLVBC started eight years ago, …

(Be the first to comment)

ODFC West Travel Soccer Program Shines

2 Dec 2015

ODFCsoccerpics

The Old Dominion Football Club West boys and girls middle school travel soccer program scored big the weekend of November 21 and 22.  The girls Quest Premier 22 team took home the championship in the U12 Girls Premier Division of the Hunt Country Classic located in Fauquier County. The boys …

(Be the first to comment)

Archives

  • +2016
  • +2015
  • +2014
  • +2013
  • +2012
  • +2011
  • +2010
  • +2009