Eric Sachetta
What to Do When the Market Is Down: A Calm Approach to Market Volatility
Market downturns can feel unsettling. When the market drops, your amygdala often kicks into overdrive, amplifying the sense of uncertainty and worry. I often hear from clients who are understandably anxious: How low will the market go? How long will it last? What can we do to avoid losing money?
These are valid questions—and they usually come from a place of real concern about personal goals and security, not the market itself. As your advisor, I believe my role is to help you understand that market ups and downs are normal, and to redirect your focus back to your own financial plan. Because that’s what truly matters.
- Understand the Nature of Market Fluctuations
It’s helpful to remember that markets naturally rise and fall. On average, the market sees a typical difference of about 14% each year between its highest point and its lowest point. Some years are more extreme and get more media coverage. For instance, during the COVID-19 downturn in 2020, the market dropped 38% from its high early in the year to its low, but then recovered strongly to finish the year up 16% overall. More recently, in 2022, the market declined over 20% during the year, followed by two straight years of 20%+ overall gains in 2023 and 2024. These numbers remind us that downturns are temporary, and that staying invested over the long term is key to capturing the full recovery.
The key is to stay invested. It’s important to have liquid funds set aside for expenses so you’re not forced to sell investments at a loss. Otherwise, trying to time the market usually leads to missing the best days of recovery. In fact, if you missed the 20 best days of 2023–2024, your returns would be close to zero, despite the market being up more than 50% overall.
- Revisit Your Financial Plan
When markets are volatile, I don’t just tell clients, “Don’t worry, the market will come back.” Because that’s not what helps people feel better. You care about your money, your financial plan, and whether you’re still on track to reach your goals.
Instead, we look at your plan together. We make sure it’s aligned with your long-term objectives and see if there are any adjustments we can make to improve it. That might mean rebalancing your portfolio to maintain your target risk level, or exploring tax opportunities like Roth conversions when market values are lower. These strategies aren’t about reacting to headlines, rather they’re about staying disciplined and taking advantage of opportunities in a down market.
- Maintain Open Communication with Your Advisor
I always encourage clients to reach out to me when they have questions or feel uneasy. In these conversations, I listen closely to how you’re feeling and acknowledge those feelings. Sometimes I’ll say, “I know you don’t want to hear the market is going to come back eventually, you only care about your money and your plan. Let’s take a look at that to see what adjustments we can make to keep you on track.”
It’s not about dismissing worries. It’s about meeting you where you are and helping you stay focused on what you can control: your plan, your behavior, and your long-term goals.
- Focus on What You Can Control
There’s a lot in the markets we can’t control. But there’s also a lot we can: spending, saving, and investment behavior. One of the best things you can do during market downturns is to stop watching the news every day. It’s not going to tell you how you should respond. Instead, let’s review your plan together and make sure you’re taking the steps that support your unique financial life.
At Sachetta, we’re always here to help you do that. We don’t judge, and we’re not here to sell you anything you don’t need. Our job is to provide clarity and steady guidance, so you can feel confident in every financial decision you make; even during turbulent times.
Let’s Keep the Conversation Going
If you’re feeling uncertain about your financial strategy in today’s markets, I’d be glad to help. Let’s sit down and look at your plan together. I’ll listen to what’s on your mind, answer your questions, and make sure you’re positioned to meet your goals—no matter what the markets are doing.
Eric Sachetta, ChFC®, CFP®, is a Certified Financial Planner™ practitioner and focuses on financial planning and client relationship management. Eric believes that with proper Wealth Management, financial, and estate planning provide an opportunity to “look at all things that you value, see how they fit together, and make choices to balance everything and to maximize the things you want to do.”