Smart Strategies for Staying Ahead in Uncertain Markets

Check the background of investment professionals associated with this site on FINRA's BrokerCheck.

Over the past few years, the market has appeared to be on a roller coaster, providing investors with moments of excitement followed by heart-palpitating anxiety. Staying ahead during uncertain market activity seems impossible, but smart strategies exist that can help you mitigate some of the risk of investing.

Willingness To Be Patient

Investing in the stock market is complicated. The complexity doesn't just come from trying to make sense of the endless ratios and calculations that people come up with in an attempt to predict how the market will fluctuate and how companies will perform over time. It comes from their ability to be patient in a world that magnifies immediate gratification.

According to a study from the University of California at Berkley, over time, 90% of investors lose money. Not only was this prevalent back in 2009 during a recession, but it still holds true today. People jump on trends, buying and selling to get the quick buck. The market doesn't approve of shortcuts. The potential for doing well in the market comes more from time and patience than anything else. “The stock market is a device for transferring money from the impatient to the patient,” said Warren Buffet, the world's greatest value investor, highlighting the importance of having a long-term strategy.

Money, if invested carefully, may grow over time because of compounding. Compounding kicks in decades down the road. It doesn't happen overnight. According to a Barron's study, Warren Buffett earned over 90% of his net worth after the age of 65. He started investing at the age of 10 and has done it consistently for over 80 years. He is living proof there is something to be said about patience.

Emotional Stability

One of the biggest mistakes people made in 2008 when the market crashed primarily due to the housing bubble bursting, was panic selling. Investors began losing money and started selling their interests for fear of falling into a new Great Depression. Watching your net worth be decimated before your eyes is traumatizing.

Even people who do not have a high-net-worth still panic when a bear market hits, and it is human nature to sell, though not necessarily the optimal approach. Investopedia states, "Those who stayed invested during these difficult times perhaps came out in the best shape.”

Diversify Your Assets

Diversifying or owning several different assets is one way to help mitigate the overall risk of your portfolio and market uncertainty and volatility. However, you will never be entirely risk-free. All investing involves risk. But taking steps to be diversified and owning different types of investment types, from stocks and bonds to index and mutual funds, treasury bills, certificates of deposit, and even real estate work to lower the risk of losing everything should one of the investments experience a significant decline.

Invest Within Your Means

Investing within your means begins with living within your means and understanding your income versus your expenses, your spending habits, why you buy what you buy, and your ability to create and follow a budget. On the Temple of Apollo in the ancient Greek district of Delphi, there is an inscription, “Know thyself.” Two of the most cogent words ever put together. Once you have a better understanding of how you behave, work on investing within your means, meaning only gamble in the market what you are safely willing to lose without that risk interfering with your happiness or financial responsibilities.

Consult a Financial Advisor

One of the smartest strategies to help you stay ahead of uncertain markets is to consult a financial advisor. With their help, you can find out where you stand in your current financial position, where you would like to be in the short- and long-term, and how certain decisions may impact these strategies and goals.

Financial advisors at BECU Investment Services can help provide guidance with investment and retirement strategies to help you prepare for the future. Our team will take the time to get to know you, understand your goals and wishes to help build a plan and implement a financial and retirement strategy that's appropriate for you. Set up a complimentary consultation or call 206-439-5720 today.

For more resources or to stay up to date on market updates follow BECU Investment Services on social media: LinkedIn; Facebook