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Weathering Volatility With a Long-Term Strategy

Read the financial news today and it’s highly likely you’ll see the term “volatility” in at least several articles. While market volatility is a normal part of the investing experience, ever since the pandemic hit the world in 2020, volatility seems to have become the new norm for investors.

“Market volatility” is the fluctuation of the market, both up and down, and the rate of that change to the equity market’s overall value. The bigger and more frequent the value swings, the more volatile the market. For example, when the stock market rises and falls more than one percent over a sustained period, it is often called a "volatile" market.

Equity markets are highly sensitive right now. Their gyrations are tied to many key factors, including inflation rates, interest rates, key economic indicators, changes in monetary policy, and global conflict. Most particularly, the uncertainty brought about by the elevated level of inflation and rapidly rising federal funds rates are fueling market volatility and investor fears.

The Federal Reserve’s fight to reduce today’s inflation rates has left stocks in a state of consistent volatility. Even though the U.S. inflation rate is beginning to slow down, it still remains well above the Federal Reserve’s 2% target. The Federal Reserve remains committed to its battle to get closer to the target range.

In January, the U.S. unemployment rate reported a five-decade-low unemployment rate of 3.4%. While the economy is still showing some signs of resiliency, the expectation is that the Federal Reserve is highly likely to increase interest rates several more times this year.

The economic environment seems as if it is balancing on a seesaw and investors are unsure of what direction it will tip. Equity markets are responding by remaining very wary and have many investors on the edge of their seats, waiting for the next move.

Seasoned investors understand that market downturns are uncomfortable, but not uncommon. It’s important to keep in mind that during volatile times like these, staying the course of your well-devised plan and remaining invested could prove to be a wise decision.

Every one of us has a unique personal financial goal. Regardless of what yours is, committing to a disciplined, process-oriented approach to your investments and money management has proven to be beneficial to long-term financial success.

The Long-term Strategy: A Historical Advantage

We all hear the terminology “long-term investing”. But what exactly does that mean? Five years, ten years, twenty? While there is no set universal timeframe, long-term investing typically is thought of as 5 or more years.

It’s extremely important to know your personal time horizon when investing.

When will you need to take from your investments?

Traditionally, there are three major time horizons, short, mid, and long-term. Knowing what horizon is best for each of your goals is much more effective than trying to time the market.

Taking money out of the market during a downturn and then trying to predict the right timing to re-invest can be a risky practice.

Studies have shared that investors who stayed in the market through volatile times have performed significantly better than they would have if they pulled their money out in a downturn and missed some of the best upward movements. As you can see from the chart in this report, missing a market rebound can be costly.

Taking a big-picture approach to your investments helps you place your focus on long-term investing.

Remember short-term movements of the market are unpredictable and do not abide by any average. Shorter-term investors are more likely to feel the impact of market fluctuations.

For many long-term investors, there is no reason to even subject themselves to daily market headlines. If you have a long-term investment horizon for your equity holdings of at least five years, chances are the current volatility will pass possibly in a couple of weeks, months, or at the most, a few years.

Investing Behavior: The Menace of Many Would-be Successful Investors

Investing can be an emotionally challenging activity, especially when times are uncertain and markets are in a downturn. How you analyze data, how you perceive economic and social news, and prior biases, are some of the factors that directly affect your emotional tendencies. It is inevitable that an investor will experience market fluctuations and even the steadiest of investors can experience discomfort. It’s natural to become anxious, however, panicking is not a plan.

Your ability to emotionally withstand market fluctuations is a primary factor in the direction of your investments. Most successful investors will tell you that there is no secret strategy or magic pill to their success. They created a plan and stuck with it, especially during volatile times, and did not let emotions dictate their actions.

Practicing perseverance can help you withstand a bumpy ride. Historically, strong rebounds have followed steep market drops. Those who cashed out and locked in losses and did not return were left behind and those who stayed invested reaped the rewards of those rebounds. It may sound cliché, but patience is indeed a virtue when it comes to investing.

Stay the course

A disciplined approach to investing is the foundation of a sound financial plan. Even when equities are performing well, investors should be prepared for uncertainty. Now, more than ever is the time to stay the course of your well-devised, diversified plan.

It is our responsibility to focus on our goals while keeping in mind that it is nearly impossible to predict the severity or length of market fluctuations. We do agree with the consensus that due to continued interest rate increases, belligerent inflation rates, and a strong U.S. economy, it appears that market volatility will continue to be with us for a while.

While you cannot control the direction of the market, you can control how you react to market volatility, when you set your time horizon, and what your risk tolerance is. We are committed to creating plans for our clients that take these into consideration. The ideal financial plan is long-term focused and positioned to best weather uncertain and volatile times.

We are diligently watching areas that we feel may affect your situation. As always, if you would like to revisit your financial holdings, rebalance your portfolio, or have any concerns or questions, we are here for you.

We believe an educated client is the best client. We will keep you apprised of issues we feel could affect your financial situation.

As a reminder, please keep us aware of any changes (such as health issues, changes in your retirement goals, or the sale of a home). The more knowledge we have about your unique situation, the better equipped we will be to best advise you.

We pride ourselves in offering:

  • consistent and strong communication,

  • a schedule of regular client meetings, and

  • continuing education for every member of our team on the issues that affect our clients.

A skilled financial professional can help make your journey toward your goals easier. Understanding your needs and objectives will help us create an optimal plan for your unique situation. As always, we appreciate the opportunity to assist you with all your financial needs.


Advisory Services offered through Materetsky Financial Group Inc., a Registered Investment Advisor. Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. Private Client Services and Materetsky Financial Group Inc. are unaffiliated entities. All insurance products are offered through unaffiliated insurance companies. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Materetsky Financial Group, Inc. [“Materetsky]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Materetsky. Materetsky is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Materetsky’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at Please Remember: If you are a Materetsky client, please contact Materetsky, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian. Note: The views stated in this letter are not necessarily the opinion of broker/dealer, and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. With any investment vehicle, past performance is not a guarantee of future results. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. All indices referenced are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. The S&P 500 is an unmanaged index of 500 widely held stocks that is general considered representative of the U.S. Stock market. The modern design of the S&P 500 stock index was first launched in 1957. Performance prior to 1957 incorporates the performance of the predecessor index, the S&P 90. Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Past performance is no guarantee of future results. CDs are FDIC Insured and offer a fixed rate of return if held to maturity. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk.


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