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Investing Through a Crisis

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Updated May 31, 2021

Randy Van Rooyen CFA®, Senior Vice President, Strategic Relationships

Advice for getting through economic downturns with confidence

In times of crisis, it’s human nature to become concerned about your investments. Whenever a major economic downturn occurs, it feels unprecedented and insurmountable. Though the COVID-19 pandemic is certainly alarming in many respects and the economic volatility it has caused—primarily in the early months— has been unsettling, it is no reason to make rash decisions about your financial future. Data released by Fidelity Investments showed that nearly a third of investors aged 65 and older hit the panic button when COVID-19 emerged, selling all of their stock holdings sometime between February and May. The vast majority of our clients at Trust Point stayed the course, trusting in the company’s century of experience, which includes surviving economic downturns ranging from the Great Depression to Black Monday to the more recent Great Recession. Even in good times, it’s important to realize these setbacks
are going to happen. It’s not going to feel like a regular event, but don’t overreact to the headlines and be sure to keep your eyes on the long term.


Here are a few tips to help get you through economic downturns and even find investing opportunities in tough times.

Think Long Term

This sounds simple, but maintaining the mindset of a long-term investor is crucial and can actually be one of the hardest things for clients to do. Simply stated, do not let short-term market fluctuations influence your investment goals. Do not let your emotions make investment decisions. After the market’s big dip in March, many were surprised at how quickly it rebounded—those who didn’t panic and stayed the course are in a better position. Remember that a long-term investment portfolio is a diversified one and diverse portfolios will be able to withstand economic swings. A lot of times you can’t avoid declines in a portfolio, but if you have a balanced objective, of say 50 percent bonds and 50 percent stocks, you’re not going to be as susceptible to the full equity market volatility.

Historical Bear Markets

S&P 500 market return at the bottom since pre-recession market peak, and recovery back to peak.

Screenshot 2021 05 18 152853

Know Your Cash Flow Needs

Though downturns don’t last forever, we still need to bridge the gap to get through them. Knowing your cash flow needs and knowing what you might need to draw on are important. Reducing susceptibility to market volatility is key here, so you might consider bonds as a diversifier. In general, clients should aim to reduce spending. So far that has happened, as personal savings have escalated to levels not seen in many years. That savings should ultimately lead to some significant spending and an economic boost down the road.

Lean on Your Advisor

Remember you are not alone in your investment decisions. Continue to revisit your risk tolerance and investment time horizon and discuss concerns or changes to goals with your advisor. Never hesitate to reach out to us to discuss your portfolio status. Remember, we are always working for you. The investment team meets very frequently to discuss things like whether we want to make changes in portfolios to become more aggressive with more equities or whether we want to be more conservative. We look at all of the information available to us to make these decisions.

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Randy Van Rooyen CFA®, Senior Vice President, Strategic Relationships