5 Things to Do in Times of Market Uncertainties
April Lynn L. Tan, CFA
COL Chief Equity Strategist
When market uncertainties are at a high and the stock market swings wildly, it’s tempting to pull out all of your money and get back in when volatility has died down. However, timing the market is extremely difficult and can even lead you to lose out on good opportunities to make money while the market is down.It’s important to calm down and avoid making investing decisions out of fear. Here are five things you should do in times of market uncertainties.
While stock markets generally rise over the long term, they tend to be more volatile in the short term—sometimes to a worrying degree.
When market uncertainties are at a high and the stock market swings wildly, it’s tempting to pull out all of your money and get back in when volatility has died down. However, timing the market is extremely difficult and can even lead you to lose out on good opportunities to make money while the market is down.
If you’re investing for the long term and you’re comfortable with the amount of money you have in the stock market, it’s important to calm down and avoid making investing decisions out of fear.
Here are five things you should do in times of market uncertainties:
1. Don’t panic
The most important thing to do in facing market uncertainties is not to let your emotions drive your investment strategies. Remember that high stress levels and strong sentiments can lead you to making the wrong investment decisions.
Stay calm and don’t panic-sell.
2. Be well-informed
It’s easy to get swayed by market noise and speculation, but our investment decisions should be based on facts and analysis from legitimate resources.
Don’t act on unverified information and speculative opinions, so you can avoid making costly investing mistakes.
3. Remember what you’re investing for
Take the time to go back to the reasons why you started investing. As long as your portfolio is still aligned with your long-term goals and your risk tolerance levels, you can ride out any short-term market volatility.
Don’t throw away a good long-term investment plan just because you’re experiencing a market decline.
4. Review your portfolio
It’s important to review your portfolio to see if you need to make any changes:
• Are you comfortable with the companies you’re holding?
• Does your portfolio still match your risk tolerance levels?
• Are you diversified enough? Do you have investments in different sectors, and outside of the Philippines?
5. Be ready for opportunities
There are strong companies with good fundamentals whose long-term value will remain the same, even as their short-term values fall because of market volatility.
Use market volatility to your advantage by buying good companies at discounted prices.
Downward market volatility can be unsettling, especially for the first-time investor. However, it is a normal part of investing that we can prepare for and even take advantage of.
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COL Financial is the country’s most trusted wealth-building partner where more than 400,000 Filipinos invest in stocks and mutual funds. COL was founded on the belief that ’every Filipino deserves to be rich’. That is why, for twenty years now, we remain committed to help Filipinos build wealth by continuously providing free seminars, expert guidance and innovate tools.