Broker Check

Bear Market Fears. What to do?

February 24, 2022

Thirty-nine years. Not an eternity but it is a significant length of time. That’s how long I’ve been in the financial services industry, serving and advising clients.

During that timeframe there have been plenty of opportunities to be fearful about the present, as well as the future. The chart below highlights a few of those times, such as Black Monday in 1987, the Dotcom Bubble Crash in 2000, 9/11/01, Brexit in 2016 and of course, the Covid Pandemic of 2020.


And now we have the Russian Invasion of 2022.

I don’t have to tell you that during these types of times, it is normal and natural to be shaken and consider navigating away from your long-term plans and asset allocation models, ones that have been built based upon key factors, namely, your retirement goals, your income needs, your time frames, and your tolerance for risk. The notion of selling everything, even at a loss, to avoid further losses, and then, getting back in at the right time, well, it is only natural to wonder if that might work...

I can tell you that during my thirty-nine-year career, market timing does not work! That has been my experience with the very small number of our clients who insisted they wanted out. We allow that of course, because it’s their money. Yet we also inform them that they are also in charge of when to get back in. Sadly, once this fear-based selling tactic is deployed, many of those who said they would get back in when "things calm down," well, they never get back in, because new waves of fears always surface, sometimes related to the original one, like a new strand of a virus, while other times, new, fresh reasons to worry surface.  

Here's what I believe.

  • Capitalism works!
  • Capitalism will win!
  • Markets are efficient and they adjust themselves when they will, without emotional buy-in from us!

Patrick Sweeny is a co-founder of Symmetry Partners. He’s been a trusted colleague of mine since 2003, when I began to utilize his firm’s portfolios first for myself, and thereafter for hundreds of our clients. Click here to watch his short, impactful YouTube video: Bear Market Planning and Behavioral Finance- Patrick Sweeny of Symmetry Partners. Note that this one-and-a-half-minute video was first published five years ago, and is as true now as it was then!

Now let’s focus on three things you can do:

1. Reduce portfolio withdrawals:  Try not to sell if it all possible and instead, utilize excess cash on hand to meet income needs at this time. This can be tricky if you are taking required minimum distributions from IRA’s. They can be delayed however, until later in the year and we can talk through those scenarios. If you are taking withdrawals from non-retirement accounts, consider slowing or discontinuing them for the time being.   

2. Increase portfolio Investments: Consider these year-to-date results:

  • Dow Jones Industrial Average, -8.8%
  • S & P 500 is -11.3%
  • NASDAQ is -16.6%.

These losses, in my opinion for long-term investors, those willing to invest for a period of five years or more, represent SALE prices! While it takes courage and a long-term view, this could be an exceptional time to invest excess cash.

3. Portfolio Adjustments: Resist the desire to adjust your asset allocations because of news story event. We only advise altering allocation as a result of changes to goals.

In closing, I believe that capitalism will defeat communism and the capital markets will prosper over the long run, yet there have been and always will be periods of volatility, and sometimes the swings can be extreme. Don’t turn temporary paper losses into permanent portfolio losses by needlessly selling. Remember our mantra: “Build a portfolio that you can live with and then live with it.” This advice has served our clients well, and has guided me personally through numerous storms, spanning a thirty-nine-year period.