Fear and Volatility
The turmoil in the markets and the economy continues. On Monday, June 13th, the markets dropped with the S&P 500 closing down 3.9%. Recent numbers show that inflation is not abating as hoped and the Fed is poised for another 0.75% rate increase. With the unrelenting doom and gloom in the news and the very real pinch people are feeling in their wallets, many investors are fearful.
We do not know the future, only God knows what will happen, but we want to offer some hope and perspective to help our clients manage their fears.
Thoughts on Market Volatility
Watching the market news on the TV can give you whiplash as the market moves up and down each day. Monday (June 13th) the S&P 500 became a bear market with a drop of more than 20% from it’s high on January 3rd. From a historical perspective, you should expect this to occur from time to time. Historically, a decline of 10% tends to happen once per year, a decline of 15% or more tends to happen on average once every two years and a decline of 20% or more happens on average every three years, this is a normal part of investing. (See our May 2022 Market Commentary)
Yes, volatility feels bad but we should expect it and not allow our emotions to drive our decision making. Wise investors seek counsel, develop a long-term plan, and stick to it. This is part of the value a financial planner provides.
It can also be helpful to remember that “the market” is actually real companies with products and services, many of whom are doing fine. Investor fear and greed can cause price swings that really have no relation to the value and profitability of the underlying companies.
Our Investment Committee at Beacon Wealth Consultants works diligently to manage your investments each day. Two things to note:
- We are active managers. We actively research and invest in companies and other investments that will achieve our portfolio goals and help our clients.
- We invest for the long-term. We actively invest to see long-term growth for our clients.
Market volatility is inevitable. The key is to take a long-term view and to not allow fear or greed to cloud your judgment and to keep looking beyond the next 3-6 months of ups and downs. We help our clients stay the course with their investing goals.
Trust the One who Knows
Corrie ten Boom is one spiritual giant I look up to. Her Christian faith lead her and her family to hide Jewish refugees from the Nazis in their home which lead to their arrest by the Gestapo. She survived the Ravensbrück concentration camp and went on to become a renowned evangelist, author, and speaker on reconciliation. As a person whose life was marked by tragedy and cruelty, ten Boom remarked, “Never be afraid to trust an unknown future to a known God.”
We do not know what the future holds, in the markets or anywhere else. But we do know a sovereign God who loves us and cares for us and we can place our trust in Him. The Bible is full of verses where God commands us not to fear. In case you’ve forgotten some of these promises of God, here are a few:
Fear not, for I am with you; be not dismayed, for I am your God; I will strengthen you, I will help you, I will uphold you with my righteous right hand. – Isaiah 41: 10
I sought the Lord, and he answered me; he delivered me from all my fears. – Psalm 34:4
When I am afraid, I put my trust in you. In God, whose word I praise—in God I trust and am not afraid. What can mere mortals do to me? – Psalm 56:3-4
Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus. – Philippians 4:6-7
Peace I leave with you; my peace I give you. I do not give to you as the world gives. Do not let your hearts be troubled and do not be afraid. – John 14:27
Therefore I tell you, do not be anxious about your life, what you will eat or what you will drink, nor about your body, what you will put on. Is not life more than food, and the body more than clothing? Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? And which of you by being anxious can add a single hour to his span of life? And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin, yet I tell you, even Solomon in all his glory was not arrayed like one of these. But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. But seek first the kingdom of God and his righteousness, and all these things will be added to you. Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble. – Matthew 6:25-30
God is good! He knows what is coming down the road and He is sovereign over it. We can place our trust in Him!
Let me make two suggestions when you are tempted to fear because of what is happening in the markets. First, lean in to God. Tell Him your fears and ask for His peace and for help trusting in Him. Second, reach out to your financial advisor. We are here to help you understand what is happening and help you make decisions that protect and support your goals. It is our privilege to walk alongside you through times of uncertainty.
If you don’t currently work with a Christian financial advisor, we would love to help you develop a plan to weather the ups and downs of the market, building confidence for the future and embracing your stewardship role. Give us a call!
The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an exact list of the top 500 U.S. companies by market cap because there are other criteria that the index includes. Still, the S&P 500 index is regarded as one of the best gauges of prominent American equities’ performance, and by extension, that of the stock market overall.