Michael Callahan
Volatile financial markets can leave even the most seasoned investors feeling uneasy. When significant market swings occur, it's natural to feel a rush of anxiety about your portfolio. You might even feel tempted to call your financial advisor and make immediate changes to avoid losses. But staying committed to a data-driven investing approach—one rooted in logic, not emotions—can help you avoid snap decisions, mitigate risk, and keep your financial goals on track.
Navigating the ups and downs of the market isn’t easy, but investing decisions driven by data and strategy, rather than fear, often lead to more stable, long-term outcomes.
Why Staying Invested Matters
Selling investments in a panic might feel like you’re taking back control in a chaotic moment. But acting impulsively during downturns can potentially derail your financial plans. Market declines are part of the natural rhythm of investing, and data tells us they’re usually followed by periods of recovery. If you sell during low points, you run the risk of missing the rebound that often follows.
Timing the Market vs. Staying the Course
There’s a well-known statistic in the investing world that illustrates why staying invested is so critical. If you miss just the “best 10 days” of stock market gains over the course of your investing career, your long-term returns could be more than halved.
Historical trends show that some of the market’s best-performing days often occur just after its worst days—a pattern that’s difficult to predict. Emotional decisions to sell and “wait it out” can mean sitting out those recovery periods entirely. The result? You’ve locked in your losses while potentially putting future gains out of reach.
This is where a data-driven and disciplined approach comes in. Instead of reacting to short-term market fluctuations, leaning on historical data and clear-eyed strategies helps investors focus on the bigger picture.
The Role of Data-Driven Investing
When markets are unpredictable, data-driven investing helps provide clarity and direction. Financial professionals use decades of historical data combined with advanced modeling tools to examine patterns across market cycles. This allows them to anticipate trends and make informed adjustments to portfolios, even in challenging times.
Behavioral finance research tells us that emotions like fear or herd mentality often influence how people react to market volatility. The comparison between individual investors and professional advisors is stark—a professional focuses on long-term goals and uses data to guide every decision. Emotional sell-offs or attempts to “time” the market tend not to factor into their approach.
For individual investors, trusting this process can help reduce the pressure to act on instincts. Working closely with your advisors ensures your portfolio remains aligned with your financial goals, no matter what the market is doing.
Three Ways to Stay Committed to Your Strategy
While your financial advisor shoulders much of the responsibility for guiding your portfolio through turbulent markets, there are steps you can take to stay grounded and confident in your strategy.
1. Stay Curious and Collaborative
Take the time to understand your portfolio. Having a sense of why your advisor recommends specific asset classes or allocations can give you confidence in the process. For instance, portfolio diversification can help spread risk, while rebalancing ensures your investments are in line with your goals.
Want to explore the rationale behind your portfolio’s composition? Ask your advisor questions! A simple discussion about how adjustments are tied to market trends can go a long way toward easing concerns.
2. Adjust Your Investment Focus
Checking financial news or tracking your investments daily can feel hard to resist, but constant monitoring can amplify stress. Watching your portfolio’s value decline during a downturn won’t give you more control—it might just make emotional decision-making more likely. Instead, take a step back and review your portfolio less frequently.
Schedule periodic check-ins with your advisor. Trust them to notify you of any urgent action items to address, and focus instead on your long-term goals. This approach helps reduce the anxiety of day-to-day market swings and reminds you to stay the course.
3. Plan for Life’s Surprises
Financial emergencies can make you feel like you need to liquidate investments before you’re ready. Building a strong safety net—including an emergency fund covering at least three to six months of living expenses—can minimize that risk.
With cash reserves in place, you’re better equipped to manage unexpected expenses without disrupting your investment strategy. Speaking with your advisor about how to prepare for “what ifs” in life—such as job loss or economic downturn—will help you set financial priorities that align with your goals.
Bringing It All Together
Unpredictable markets often feel overwhelming, but they’re just one piece of the larger financial puzzle. Staying invested, especially during periods of volatility, helps you reap the long-term benefits of your investment plan. Data-driven strategies, when combined with proactive planning and personalized advice, give you the tools to weather market cycles and maintain confidence in your portfolio.
You don’t have to face these challenges alone. Reach out to your financial advisor whenever you need perspective or reassurance—they’re there to guide you. And if you’re looking for a data-driven approach to support your long-term investing goals, contact us today.
Michael J Callahan, CPA, CFP®, MST, and CEO is a Certified Financial Planner™ practitioner, Certified Public Accountant, and holds a Master’s Degree in Taxation from Bentley University. Mike has been involved in personal financial planning, as well as both business and individual taxation for more than 20 years.