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How To Survive Market Turbulence

We’ve hit turbulence

As I write this post, I find myself somewhere along the air traffic corridor between Denver and Minneapolis, cruising at a turbulent 37,000 feet. However, I remain indifferent and non-panicked. Why? Because I have experienced flight turbulence countless times, and I always remained fastened in my seat. 

While each time the turbulence may vary in duration, it has never caused my flight to crash, nor has it forced me to jump from the plane mid-flight in terror.

Is it possible that my flight could lose all altitude and end in ruin? Yes, but that remains unlikely.

So, this got me thinking of the market volatility we have experienced lately, the many reactions I have seen, and how people can let hysteria run amuck.

The Fastened Seatbelt Sign Is Now On

When the markets get turbulent, what should you do? Well, of course, you should remain seated. Still, that remains easier said than done.

Watching your portfolio shave 20% or more in a matter of months can be stomach-wrenching, just like an unexpected loss of altitude during a flight. However, panicking does little to quell the situation. 

The more you scream on the plane, the more others scream. But this terror only exacerbates everyone’s emotions without changing the outcome. 

And the stock market is the same.

When stocks go up, everyone shares in comradery and pats one another on the back. Yet, when stocks go down, many people panic and spread fear, only feeding the hysterical atmosphere.

But, if your plane loses altitude, do you abandon your seat and jump out mid-flight? No, of course not. You stay buckled in and hold on tight to your shared armrest because, in the end, you likely will be fine.

Investing should be like this.

Invest like you can’t change your destination

Once you board a plane, you are generally bound to the flight’s destination. Similarly, your strategy should be the same when investing in stocks and bonds. 

You accumulate assets on your ascent, burning your energy to gain a higher altitude of wealth. Then, once you reach a critical mass, resistance fades, and you glide at cruising altitude. Finally, once retirement starts, you begin the descent and initiate your portfolio drawdown.

Yes, there will be scares along the way, but so long as you invest according to your risk tolerance, you likely will be fine. Just fasten your seatbelt and adjust your investment portfolio at different milestones depending on how much risk you want to take. 

At the beginning of your journey, you surely will take more risks. Then, as you approach retirement, you may consider easing back the throttle to tamper down on sudden movements. But, everyone is different.

And remember, stick to your charted plan. Panicking mid-journey and abandoning your flight path will only hurt and affect your future desired state. 

Cash is a crash

If you can’t handle the downs, you can’t handle the ups, and you are bound to crash. Further, with inflation omnipresent, the last thing you need is to watch your dollar’s value diminish while determining how to get back into the market after taking a loss during the fire sale.

Investing is a game of patience, just like sitting aboard a plane cruising through the sky. 

You can jump up and down in celebration or scream in terror. Still, neither will speed up your flight, and both can risk delaying it.

So be intelligent, patient, and invest according to your true risk tolerance. Doing anything else would be crass.

As always, have a great day!

(Shoutout to my friend and fellow advisor Alex for sharing this analogy with me and serving as the inspiration for today’s post.)


Mile High Finance Guy

finance demystified, one mountain at a time






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