Choose Discipline, not Fear, as an Investor

Fidelity states that the average largest intra-year drop from peak to trough for the S&P 500 has been about 14% since 1980.  Despite these frequent intra-year declines, the S&P 500 has still delivered positive annual returns in most years. For example, from 1980 to 2020, annual returns were positive in 30 out of 40 years, despite average intra-year drops of 13.8*.

Resist the urge to make emotional decisions based on short-term market movements.  Attempting to time the market by selling during declines and buying back in later may lead to missed opportunities.

Consider maintaining a well-diversified portfolio across different asset classes to help mitigate the impact of stock market volatility.  Think about periodically adjusting your portfolio back to its target allocation, a strategy known as “rebalancing”, which may help manage risk and potentially capitalize on market fluctuations.

You may feel fear but stay disciplined and focused on your long-term financial goals.

Investing involves risk, including possible loss of principal. Past performance does not guarantee future results. Diversification does not eliminate the risk of experiencing investment losses. Rebalancing a portfolio may involve tax consequences and additional transaction costs.

[*source: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/fidelity/market-volatility-is-normal.pdf]

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