Has an Uncertain Stock Market Derailed Your Investing Plan?

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Stock Market

The Taper.


Potential government shutdown.

Political shenanigans.

What, other than politics, do all these things have in common? Strangely, they all share an ability to throw the stock market for more loops than a premiere roller coaster at a Six Flags Amusement park. Truth be told, we’ve been through these ups and downs, twists and turns before (or very similar ones) over the past five years and it never ceases to push the average retail investor to the edge of the cliff with thoughts of jumping out of the stock market altogether.

Newsflash – The Stock Market is Uncertain By Nature

I’ve got a secret for you…are you ready? The stock market IS uncertain. It’s more volatile than a three year-old on a sugar high who has gone a full week without naps. Yes, there are some crazy headwinds right now. Yes, we could see a pullback, but does that mean we should take our ball and go home?

I would argue that we have to stay in the game. Understand and realize that the stock market goes through tumult and unless you plan on robbing banks, there are few other ways to build wealth over the long term.

Don’t Bury Your Head in the Sand

I’ve shared before about my last job in corporate America and that I got to speak with investors on a daily basis as they were jumping out of a sinking ship (or so they thought). Many times their solution was to simply park their money at the bank, which is actually losing them money today, or quite literally put it under their mattresses. I can understand that emotion on one level, especially for those in the Boomer generation as they saw their retirement portfolios cut in half in very short order. However, for many, while staying in the stock market and investing for the long haul takes a long time, burying your head in the sand will generally get you nowhere quick.

I believe the current volatility in the stock market provides a perfect time to look at your investment plan, analyze how comfortable you are with your investments and see where the chips fall. That may mean pulling out of some holdings to capture gains, but that generally should not mean pulling out altogether. What it also should mean is not listening to the investing “noise” of CNBC and the like, but doing what is best for you and your situation.

Look Beyond Today

What is it that you want to accomplish with your investments in the stock market?

I would ask a variation of that question to my clients and many struggled to look past what was currently going on in the stock market. More often than not, they would share their goals with me, but their actions betrayed their statements. With the growing volatility in the stock market this is a better time than not to look at what your goals are and what you’re trying to accomplish. From there you can do such things as:

All of this should be done with a long term view of your investing. Unless you’re near retirement age, you likely have decades to continue to mold your retirement planning and it behooves you to think in that way. Sure, there might be some dips or full-on pullbacks, but in the long range scheme of things, being in the stock market at some level serves you better than running.

Go Against the Grain

“Be fearful when others are greedy and greedy when others are fearful.”

I love this quote by Warren Buffett and it’s the approach I like to take often times with our investing in the stock market. I have one of our OptionsHouse accounts set up to serve this purpose alone. It means that when others are fleeing the burning building, you’re going in to see if there are any survivors remaining. Are you guaranteed there will be some survivors? Of course not. But my unscientific testing over the past five years has shown me that more often than not there will be.

I will warn you though, doing this can require a strong stomach when it comes to investing in the stock market. It’s not for everyone, but if you can stomach the risk then there can be some solid gems to have in your investment portfolio. Even if you do something as simple as increasing your dollar cost averaging it can be a great way to reap some solid long term gains.

However, this all comes with the preface that you have to do what is right for you and your situation and not someone else’s situation. I believe that is what gets lost when it comes to uncertainty in the stock market. The talking heads get on television and they warn that the sky is falling and guess what…people start selling their stocks. Not only does this mean added trading costs, but it also means the possibility of losing out on longer term gains. So, the moral of the story is when you start thinking of the growing uncertainty in the stock market and how it impacts your investing plan and portfolio – look at your needs and not at the hysteria of others.


Does the uncertainty in the stock market have you concerned about your portfolio? What are you doing to not betray your goals?


Photo courtesy of: 401 (k) 2013

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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  • DC @ Young Adult Money says:

    As I’ve said in the past, I really only put money in my 401k. I don’t have a desire to mess around with an individual account and have debt to pay down and a savings fund to build up. Regardless of the news I will continue to put the same amount in my 401k each paycheck – as you said, it’s volatile by nature so no reason not to be consistent.

    • John says:

      That’s definitely the approach to take DC, especially in regards to a 401k. It only makes sense and you also don’t risk running up a bunch of possible fees either.

  • Jason @ says:

    As you point out, John, markets fluctuate. If you can’t sleep at night, your expectations could be too high or you could be in the wrong investments (or maybe both). A good financial adviser can help manage your expectations and set up something that’s ‘just right’ for you.

    • John says:

      Totally agree Jason. If you can’t sleep at night then it’s generally not worth it and should re-analyze your investment strategy.

  • Brian @ Luke1428 says:

    My goals have not changed in the face of the market’s fluctuations. I know it is still the best place to build long-term wealth so I continue to put money into it. And I try to ignore the day-to-day noise coming from the media. The more we listen to that, the easier it becomes to question our investment objectives.

    • John says:

      That’s a great point Brian, it really can make it easier to question your goals/objectives if you’re not steadfast in them.

  • Roger @ The Chicago Financial Planner says:

    Well done John! I’ve been in the financial planning and investment business since the mid 90’s and there is always something going on in the economy or the world at large that spooks investors. Investing is a long-term proposition that should be tied to an investor’s financial plan and long-term goals. Certainly some adjustments may be in order based upon the current state of things, but overall much of what the news media touts as game changing is just noise in the background.

    • John says:

      Thanks Roger! I agree, and there is almost always something going on – and it’s vital to try and block out the noise that is going on. If you don’t it can really derail your goals if you allow them to.

  • Matt Becker says:

    Great stuff John. You know my take on this. I barely even notice the market movements these days as it’s just not something that has any relevance in my life. I do think that periods of volatility can be a good time for new investors to re-assess their risk tolerance and asset allocation, but as you say it needs to be done with a long-term view.

    • John says:

      Thanks Matt, and that’s the approach I take. It’s not really relevant in my life either, other than for pure entertainment value.

  • MMD says:

    You are definetly right about filtering out the noise from the media. All this does for me is reinforce the fact that diversification is still just as important as ever. A good combination of bonds with solid stocks will help you whether any uncertainty.

  • Holly@ClubThrifty says:

    This is one of the reasons that I’m glad we don’t have cable television. We don’t hear about the stock market highs and lows as they take place. I just check in once a month or so to see how things are going.

  • Kim@Eyesonthedollar says:

    If you let day to day changes in the market worry you too much, you probably aren’t invested there anyway. Long term, it should all come out OK if you have the right balance and keep adding money.

  • Laurie @thefrugalfarmer says:

    Love the Buffett quote, John! We are not currently investing, other than through Rick’s employer, but we’re poised and ready to buy when a dip comes. 🙂

  • Stefanie @ The Broke and Beautiful Life says:

    I’m a buy and hold kind of gal. The world might be turning upside down but I’m in my 20s, I’ve got plenty of time to let the world turn right side up again.

    A friend of mine was in on the facebook IPO. It plummeted to half the IPO price a few months later, now it’s up again. All in due time.

    • John says:

      That’s the same general approach take Stefanie. You have time on your side as well, so it really helps smooth things out for you in the long run.

      The FB IPO is a good lesson in this. The media was all abuzz about it and a lot of people lost money because of it. You have to do what’s right for you.

  • Mark Ross @ Think Rich. Be Free. says:

    I love that quote too..The stock market is really uncertain and that’s one of the challenges you’ll be facing when you start investing in it. So, you better get used to it. Right?

  • Lance at Money Life and More says:

    I refuse to let current short term volatility affect my long term plans 🙂 I guess I am lucky that I can ignore the big swings and don’t try to time the market.

  • Budget and the Beach says:

    I try not to let it get to me and stay on course with my goals on saving and investing. I try to only focus on things I CAN control.

    • John says:

      That’s the best thing I’ve heard all day Tonya. You really do need to focus on what you can control – that will help you out more often than not.

  • My Financial Independence Journey says:

    Uncertainty can create great opportunities if you’re a value investor. Overvalued stocks get knocked back to reasonable valuation levels and undervalued stocks become even better buys. Back in 2011, when we had similar Congressional craziness, I was scraping money out of every available account to invest with.

    • John says:

      I could not agree more MFIJ! I was doing the same thing in 2008 and 2011. It’s a great way, if you know what you’re doing, to get in on some great opportunities and really maximize what you have going on in your portfolio.

  • Nick @ says:

    My investing is not changed by what the market is doing. I have a long investing timeframe, so I just continue to put money in consistently.

  • Shannon @ The Heavy Purse says:

    I love that quote from Warren Buffett too. Who knew the stock markets were so volatile, right? 🙂 I’ve definitely had my fair share of conversations with nervous investors too. Most people understand in theory that the markets are volatile but the reality of investing through a volatile market (or a 3 year old on a sugar high!) is far tougher than they imagined. I understand their fears and concerns as I certainly don’t like seeing my own investments take a hit, but as you said, focusing on our goals is key. There is never a better time to reaffirm goals and your TRUE risk tolerance in volatile market conditions. And to remind yourself that there is money to be made in both the dips and highs.

    • John says:

      I could not agree more Shannon, it can be much more difficult than imagined. I get that people see their money vanish and they want to run for the hills with what’s left of their money. Generally speaking though, they’re more well served by staying the course.

  • Grayson @ Debt Roundup says:

    There will always be news. I just am looking toward the future. I would be skeptical of the markets ups and downs when I near retirement, but I have some time before that happens.

    • John says:

      You’re exactly right Grayson. If you’re near retirement then you might want to take a different approach, as long as it’s not done out of fear. If done wisely, then I can totally see how shifting out would serve someone near retirement well.

  • Jacob | iHeartBudgets says:

    I don’t have the extra cash flow to invest in turbulent times, but really wish I did. I look forward to the day when markets crash again and I have some cash to play with.

    But overall, I’m 27, and have a TON of time to keep with the long-term strategy as well, hitting my 401k match and tucking some away in my Roth each year. News doesn’t really bother me much. Kinda glad I went through a big market crash early in my investing, so I know what it’s like.

    • John says:

      You’re right on Jacob. That is the right view to be taking given your case. You have 3-4 decades since you’ll be tapping it anyway, so you’re well served by staying the course and doing what you’re doing. Having that experience seeing the crash early on should also serve you well too. Unfortunately (depending on how you look at it I guess) the market doesn’t always go up and it’s vital to know that.

  • Andrew@LivingRichCheaply says:

    My co-worker was just talking to me about this right now. He was contemplating calling to change his 401k allocations to something safer. The crazy market fluctuations don’t really bother me…I’m in it for the long term. It sucks when you open up your statement and see a big drop, but I’m still confident in my allocation and that things will ultimately be okay.

    • John says:

      I agree, it can be discouraging to open that statement and see you’ve taken a hit. However, that’s all a part of the deal and it sounds like you have the right mentality Andrew.

  • Kurt @ Money Counselor says:

    I’m largely out of the stock market, after a decade or so of gradual divestment. I’m quite satisfied with our strategy, and I have found lower risk ways to build wealth over the long term. They’re actually quite easy to recognize, once one ceases fixating on stocks.

    Remarkably, millions have retired quite comfortably, and still do today, while never taking on the risk of stock investing. On the other hand, millions of Boomer-aged investors who accepted what’s become standard financial advice and entrusted the lion’s share of their nest egg to Wall Street have seen their retirement plans shattered by two equity value crashes in the past 13 years.

    Stock investing can be very rewarding. My only objections are that, in my opinion, the risks are actively glossed over, if not misrepresented, by the financial industry generally, and that standard financial industry advice is rooted in what’s best for money managers, not what’s best for investors. Any overlap is purely coincidental, imo.

    • John says:

      I thought that was the case for you Kurt and I think it’s great you’ve been able to do that and be successful at it.

      I agree that risks can be glossed over and when you add that to a general illiteracy about how to invest wisely it makes it a powerful combination to potentially harming you. Ultimately, in my opinion, you need to do what’s best for you when it comes to investing. Unfortunately too many to hire out their decision making to those who do not have their best interest at heart or simply ignore their investments which can generally will only be detrimental.

  • Jack @ Enwealthen says:

    I diversify outside the stock market. Tax sheltered retirement in an IRA, 401k, etc. is nice, but not when it traps you in the securities markets. Diversifying across stocks, bonds, T-bills and other paper securities isn’t really diversification.

    At this point I only contribute enough to the 401k to get the match, and am diversifying into real estate, P2P lending, businesses, etc.

    • John says:

      That’s great you diversify outside the market Jack. I believe that is vital as well, as I touched on.
      That said, I would disagree that you can’t have diversification within being solely invested in the stock market. I believe you can, if you know what you’re doing. True, being in only a handful of stocks is not really diversification, but that’s not what I am really arguing. I think being outside of the market can bring a more broad diversification but that doesn’t mean it’s the only way to be diversified.

  • Joe@StackingBenjamins says:

    I’m pretty fired up because for once I have some money sitting in cash that needs to be invested. Come on, stock market! Go down! Go down a ton!

  • Debt Hater says:

    I agree with your section on “looking beyond today” especially since I’m not really ‘actively’ investing. I have a Roth IRA and my automatic contributions to my 401k, but those are both in Target Retirement funds for now. It’s annoying that our government’s ineptness causes the stock market to go down (a whole different story) but I’m invested for the long haul, so I just have to be able to reassure myself as the market moves up and down – without overreacting and changing any of my contributions. If the entire market crashes and I lose all my money, well I think we have a much worse problem on our hands than my 401k.

    • John says:

      I agree, it can be frustrating to see the shenanigans by the government cause issues to the stock market. Ultimately, it’s just another thing to deal with in regards to the market.

  • says:

    Stocks need a wall of worry. They usually climb when it isn’t as bad as the market prices it in. If stocks get affected by this shutdown I’m a net buyer as this shutdown won’t last long.

  • Chad | The Stock Market and I says:

    The stock market in of itself is complex enough. However when you incorporate a political environment that is essentially crisis driven governance, you get a completely different animal. I think awareness and having a plan or strategy will help eliminate errors if you are an investor or trader.

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