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What to Do When the Market Takes a Turn

You notice over your morning coffee a stern warning emanating from your television as the very serious business reporter notes the Dow is opening down 1 percent.  What do you do? If you screamed “Sell!” or “Panic!” perhaps you should take the advice of some of the world’s savviest investors and turn away from the stock ticker for the rest of the day.  You may be envisioning dollar signs flying out of your wallet and you want to get on the phone and sell.  You may even see an opportunity to buy.  However, market gurus advise that if you have a wise strategy, you should stay the course.  Staying the course, or “weathering the storm,” is almost always our message for our clients.  Ironically, we receive very little panic from our clients during downturns; that’s because we believe that finding the right asset allocation for our clients is a priority.  The right balance of equity to fixed income investments is essential in every person’s investment plan.  

Although an all equity strategy will most likely make you the most money in the stock market in the long run, if a drop of 20% causes you to panic and sell, has your current financial advisor done their job? Probably not.  Here at Curran Wealth Management, that is our focus.  We find our clients a comfortable asset allocation that aligns with their goals and long term investment strategy.  By investing in quality companies, our portfolios have consistently weathered downturns better than the broader market.  If you are feeling unsettled or uncomfortable in your current investment situation, please give Curran Wealth Management a call at (518) 391-4200 or email info@curranllc.com.

Advice From the Oracle 

Billionaire and real estate magnate Warren Buffet told CNBC in 2016 that buying or selling in a rush may not be the best strategy.  “If worried investors are trying to buy and sell stocks, and worry when they go down a little bit … and think they should maybe sell them when they go up, they're not going to have very good results."  Such a panic move could unbalance your portfolio where you are either taking on more or less risk than you should.

Resist Panic Selling

If you sell in a rush to get out of a down market you could end up missing some big gains when it corrects.  A few bullish days in the market can yield a big return; however, you will miss those few days that could make a $20,000 difference over a decade of investment.

Buffet advised to look at the earnings sheet to determine whether you have made a good investment, not the market.  You can’t judge your investment strategy all of the sudden; you have to look long-term.

Taking Advantage of Tax Laws

Many financial advisors suggest a strategy to create tax losses to offset capital gains by selling an investment.  If your gains are less than your losses, you can claim those losses on your tax return, except in a retirement plan.  You can carry over losses greater than the amount you can claim on your annual return to another tax year.  The strategy is called tax loss harvesting.  A good financial advisor can assist you with developing a strategy that works for you.

Another thing that many financial advisors agree on is to stay calm.  Staying in the market during a crash is important for younger investors.  Older investors may be worried that the market crash will trash their retirement nest egg.  Young or old, the best protection may be to consult an experienced financial advisor before making any investment moves.  Speaking with a professional can give you peace of mind and sound advice during economic turbulence.  Please call this office and we would be happy to speak with you.

Please check with your Curran Wealth relationship manager,
or contact Curran Wealth Management if you have any questions.
 518.391.4200 •
 info@curranllc.com

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

The material contained in this article is for educational and informational purposes only.  The information herein is considered to be obtained from reference sources deemed reliable, but no representation or warranty is made as to its accuracy or completeness.  This article is not, and should not be regarded as “investment advice” or construed as a “recommendation” or an offer to buy or sell a security.  The information contained in this article may not apply to your personal circumstances.  Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation.  Information on taxes is based on the tax laws existing at the time of publication.  Tax laws are subject to continual change.  In addition, tax laws vary by state.  This article is not, and should not be regarded as tax or legal advice.  We cannot ensure tax consequences of any transaction.  If you would like a detailed analysis of your tax situation, with specific tax recommendations, you can discuss the possibility of pursuing a formal relationship with Hippo Tax Services, LLC.