Opinion: Holding Steady in Rough Seas: Thoughts on Weathering a Volatile Market
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By now the chances are that those of you who have investment/retirement accounts have received your March statements or soon will. If you’ve been paying even the slightest attention to news of the stock markets, you may be anxious thinking about what you consider to be your losses – especially if your holdings are in a retirement account.
The good news is that, unless you sold something for less than you paid for it, you haven’t actually taken a loss. Yes, it’s alarming to see a drop in the value of your holdings, but markets recover. For example, on Black Monday of 1987 the Dow dropped 22.6% – the largest one-day drop in its history. Less than two days later it had regained 57% of its value and two years later had surpassed it.
A saying on Wall Street: “Markets are driven by greed and fear.” We’re definitely now in a fear cycle. Traditionally, some market pundits shake their heads and pronounce “this time it’s different.” But it never is. Right now, Trump’s stop-and-go tariffing moves are shaking the markets. But this, too, shall pass.
Back to good news: the income you receive from stock dividends and bond interest isn’t affected by market gyrations. If you rely on withdrawing a certain amount from your retirement account on a regular basis, you will still be able to do that.
If you are over the age of 73 and your holdings are in a retirement account, you must take a Required Minimum Distribution each year. You have the entire year to do this so, if you are short of cash, you have until the end of the year if you need to sell something in your account.
If you’re surprised at how uncomfortable you’re feeling, it may be time to rethink your risk tolerance. Schedule a conversation with the person who handles your account and discuss the full array of savings and investment opportunities available to you.
This is a good time to reflect on the perennial push to privatize Social Security. Some people are thrilled with the prospect of making decisions about “their” money. Unfortunately, it seems to be human nature to want to buy when you feel good about the markets and sell in a panic when you feel bad, guaranteeing that you’ll buy high and sell low – the perfect recipe for disaster.
Disclaimer: Neither the author nor the Indy intends to offer any specific investment advice.
Christina Platt, retired after over 30 years as a Senior portfolio Manager at Morgan Stanley. She raised her two children in Amherst between 1970 and 1993 and then moved to Berkeley, California where she served on the Board of Mother Jones magazine for ten years. Now back in town since 2012, she co-chairs the board of the Rosenberg Fund for Children.
As Christina thoughtfully advises (Magritte-like?), this is NOT meant to be advice for individual investors!
However, it can be a useful guide “on average” or “collectively” — and that may have implications for (pending) public projects which will need to make frequent, substantial cash payments to contractors, much like the annual RMDs in an individual’s retirement account.
For example, at the emergency Town Council meeting last Monday, a representative of the Jones Library Capital Campaign represented that a substantial portion of the Jones endowment had been moved from equities into more liquid assets. That may have been a prudent move before the current panic in the equities market. While some individuals who pledged to support the Jones Library demolition/expansion project may have been equally cautious in their investment strategies, many others may have been less so, and their re-assessment of risk may be reflected in the dearth of new pledges, and possibly even more unfulfilled pledges to the Jones campaign.
A broader view of the financial situation suggests international investors are moving away from US-dollar-denominated securities of all kinds, reflecting weakness in the US-dollar as a reserve currency. Furthermore, imported materials — and materials priced based on world-wide commodities markets — are needed for these public projects, so we can expect they will become much more expensive if the US dollar continues to weaken (this is on top of any tariffs imposed by the US and by most other nations).
So in these stormy times, will the Town Manager be “Holding Steady in Rough Seas” (reminiscent of the ship’s captain in Conrad’s short story Typhoon, or perhaps the Jones Library will wind up like the ship in Conrad’s even shorter Youth: a parable — a world’s worth of “blue-tarps” won’t be enough!)?
Or will he wisely “Sit Tight” which according to Google AI “is an idiom that means to wait patiently and take no action?