The following article is from the latest edition of LGA’s financial newsletter, “What Would Jeff Do?,” written by Jeffrey Levine, CPA, MST, our Director of Financial Strategies. If you have a general financial question for future newsletters, please submit them to Jeff. Enjoy this article? Subscribe to the newsletter here.


What actions should be considered with the recent stock market volatility?

Stock market volatility is a familiar occurrence, with significant fluctuations both up and down over the years. Since Thursday, August 1, the market has experienced notable declines:

  • Dow Industrial Average fell 2,157.74 points, or 5.2%, from its record high.
  • S&P 500 index dropped 336.01 points, or 6% from its record high.
  • Nasdaq Composite declined 1,398.09 points, or 7.5%, from its record high.

Despite these eye-opening declines, each of these measures remains positive year-to-date :

  • The Dow is up 2.62%.
  • The S&P 500 is up 9.35%.
  • The Nasdaq is up 9.71%.

With the Presidential elections approaching, a poor jobs report, and rising tensions in the Middle East, what should you do?

 

Stay Calm and Assess Your Personal Situation
It’s crucial to stay calm and evaluate your own financial situation rather than comparing yourself to friends, relatives, or posts you see on social media and the news. Consider these steps with regard to your own finances and your own goals and objectives:

  • Remember Your Personal Goals: Assess your overall net worth and cash flow needs. Ensure your strategy aligns with your short-term and long-term goals.
  • Evaluate Your Risk Tolerance: If the recent volatility is causing stress, you may want to rebalance your holdings to better match your risk tolerance. Consider moving to cash, bonds, or dividend-paying stocks with lower volatility.
  • Reconsider the Diversity of Your Holdings: Given the market’s year-to-date gains, you might take this opportunity to rebalance your portfolio by taking gains and harvesting losses. Diversify across different classifications, geographic areas, or sectors to balance risk.
  • Avoid Panic Selling: Major decisions based on emotions are not advisable. Reassess your goals and risk tolerance to avoid hasty moves.
  • Explore Investment Opportunities: Market declines can present buying opportunities for those with long-term investment goals or those looking for a rebound. However, remain calm and align decisions with your personal goals.
  • Seek Professional Advice: Volatile times underscore the importance of a dependable financial advisor. A professional can provide research-based advice tailored to your personal goals and financial situation. Don’t hesitate to contact your advisor, even if it is just to check in and perhaps have them calm your nerves by reaffirming your strategy and goals

LGA’s Commitment:

At LGA, we are committed to keeping you informed and prepared. We monitor legislative developments closely and will provide updates that could affect your financial and tax planning strategies. As always, we’re here to assist with navigating these complexities. For personalized advice and to discuss how these potential changes might impact your financial strategy, contact us today. We’re here to help you make the most informed decisions for your financial future.