Imagine you’re standing on the Tel Aviv promenade, watching the waves. Some days, the sea is smooth as glass; other days, the waves crash like they’re trying to knock you over. But no matter how rough it gets, the ocean eventually settles. Investing feels the same way—markets go up and down, but over the long run, they tend to even out. The real question is: Will you stay steady, or will you let the waves throw you off course?
Market Panic: Been There, Done That
A client checked her portfolio one morning and saw some numbers in red. She called and said, “Do I need to sell everything before it gets worse?” Although past performance is no guarantee of future returns, I told her to remember that selling during a market drop is like leaving a movie in the middle of the action because the hero is in trouble. You don’t know how it’s going to end, and if you bail too soon, you might miss the turnaround.
Warren Buffett, one of the most successful investors, once said, “Be fearful when others are greedy and greedy when others are fearful.” Translation? Don’t follow the crowd. If everyone is panic-selling, that might be the time to hold firm—or even buy. If everyone is hyped up about a “can’t-lose” investment, it might already be overpriced. The goal isn’t to chase the crowd; it’s to stick to a smart plan that works for you.
Why Age Should Shape Your Investment Strategy
A 50-year-old entrepreneur who recently sold a business is in a different position than a retiree living off savings. Younger investors can afford to take more risks because they have time to recover. Retirees? Not so much.
One retiree I met had most of his money in stocks. When the market dropped, he had to sell shares to cover his expenses, locking in losses. Then, after adjusting his portfolio to include more stable, income-generating investments, he was better prepared and had enough cash flow to ride out market swings without making panic-driven moves.
For those managing U.S. investments while living in Israel, having cash reserves can be a game-changer. If all your money is tied up in stocks and the market crashes right when you need cash, you could be forced to sell at a loss.
What Smart Investors Do Before a Crisis Hits
No pilot waits for turbulence to learn how to handle it. Investors shouldn’t wait for a market downturn to think about their financial strategy. A solid plan doesn’t mean avoiding risk—it means managing it wisely.
One prospective client assumed her U.S. portfolio was diversified. When we looked closer, we found she had most of her money tied up in one sector. When that industry took a hit, so did her entire portfolio. After making adjustments that we discussed, she felt more confident knowing her investments weren’t all dependent on the same market trends.
A smart investment plan includes diversified investments, a strategy for handling cash flow, and regular check-ins with a financial professional. That doesn’t mean you’ll never see losses—no strategy can promise that. However, it does mean you’ll feel more in control when uncertainty arises.
Want to know if your investing approach matches your personality? Understanding your investment persona can help you make smarter, more confident financial decisions—especially when the market gets rocky. Find out what kind of investor you are and how to build a strategy that works for you. Read more here: What’s Your Investment Persona?
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of this website, Portfolio Resources Group, Inc. or its affiliates. Neither Profile nor Portfolio Resources Group, Inc. or its affiliates, provide tax or legal advice. Nothing in this article is intended to be investment, tax, or legal advice. Information in this article is gathered from sources considered reliable, but we cannot guarantee their accuracy. Past performance is no guarantee of future returns.
