Six Tips to Manage Volatile Markets

Posted: 12/17/2019 by Fidelity Viewpoints

When markets get choppy, it pays to have an investing plan and to stick to it.

Key takeaways

  • Uncertainty is a constant, and downturns happen frequently. But market setbacks have typically been followed by recoveries.
  • Stay disciplined: Trying to time the market has proven challenging—and could cost you.
  • Plan for a variety of markets: An investing approach built with your goals and situation in mind may help you cope with short-term volatility.
  • Consider help: You may want to look at a professionally managed solution.

1. Keep perspective: Downturns are normal and typically short

  • Market downturns may be unsettling, but history shows stocks have recovered and delivered long-term gains.
  • Over the past 35 years, the stock market has fallen 14% on average from high to low each year, but still managed gains in 80% of calendar years.

2. Get a plan you can live with—through market ups and downs

  • Your mix of stocks, bonds and short-term investments will determine your potential returns, but also the likely swings in your portfolio.
  • Pick an investment mix that aligns with your goals, timeframe, and financial situation, and that you can stick with despite market volatility.

3. Focus on time in the market—not trying to time the market

  • It can be tempting to try to sell out of stocks to avoid downturns, but it's hard to time it right.
  • If you sell and are still on the sidelines during a recovery, it can be difficult to catch up. Missing even a few of the best days in the market can significantly undermine your performance.

4. Invest consistently, even in bad times

  • Some of the best times to buy stocks have been when things seemed the worst.
  • Consistent investing can give you the discipline to buy stocks when they are at their cheapest.

5. Get help to look for positive aspects of a down market

  • While no one likes to lose money, your financial representative may be able to help you take advantage of a down market.
  • Tax rules may let you use losses on some of your investments to reduce your future tax bills, a strategy known as tax-loss harvesting, or use lower share prices to convert to a Roth IRA at a lower tax cost.
  • Down markets may also be a good time to meet with your representative to discuss adjusting your investment mix, or taking advantage of opportunities when prices are low.

6. Consider a hands-off approach

To help ease the pressure of managing investments in a volatile market, work with your representative to determine a strategy that fits your risk tolerance.


There was an issue with your input


Please confirm