When markets are falling, the hardest thing to do is nothing. It feels unnatural. We’ve been trained to associate volatility with danger, and danger usually demands action. Sell something. Move to cash. Wait it out.
But panic isn’t a plan. And doing something for the sake of feeling like you’re doing something often backfires.
Here at Consolidated Planning, our planning philosophy focuses on protecting today before we can even begin to plan for tomorrow.
In what follows, we’ll help you understand the importance of examining your investments vs. your feelings about them and four factors you should consider before making any changes during unpredictable markets to help ensure you have a plan that holds up during these times.
Change With Your Investments vs. Change With Your Feelings
To be clear, fear during a market slide is completely reasonable. And you are not alone with that fear. It’s not irrational to be uncomfortable when your portfolio shrinks in real time. The unreasonable mistake is skipping straight from fear to reaction, as if that discomfort requires a tactical shift.
A better approach is to start by checking in with your own thoughts and feelings — yes, really.
What’s bothering you?
Are you worried about running out of money?
Angry at how fast things turned?
Are you embarrassed you didn’t “see it coming?”
These are all legitimate reactions. But left unexamined, they tend to take control of the steering wheel and drive your decision-making straight into the ditch.
Once you’ve had a moment to process your internal reaction, then it’s time to ask whether anything external has really changed. If your personal goals haven’t shifted, if your income needs are the same, if your timeline is still intact, then the decline itself isn’t a signal to do something different. It’s a signal to revisit your strategy — not rewrite it.
4 Factors To Consider For Your Investments Today
This is when plans are supposed to earn their keep. The entire point of building a long-term investment strategy is to avoid having to re-engineer it in moments like this. A solid plan accounts for expected downturns, corrections, and bear markets. If your plan didn’t account for this kind of environment, that’s a design flaw worth fixing — but not under pressure.
With that said, there are productive steps you CAN take in the middle of a rough patch, though they might not be what you think.
#1 Assumptions
Let’s start with your assumptions. Go back to the basics: are you still planning to retire in five years? Do you still need the same level of income from your portfolio? Has anything changed about your health, your work situation, or your short-term goals?
If you can answer ‘no’ to these questions, your portfolio probably doesn’t need a dramatic intervention. But if you’ve been putting off reviewing your retirement income plan, now’s a great time to revisit it with a cooler head.
#2 Risk Exposure
Next look at your risk exposure — not in the abstract, but in how it’s showing up in your day-to-day experience. If watching your balance drop 15% makes you want to cash out, then you’re likely carrying more equity risk than you’re truly comfortable with.
And that’s not a market problem — it’s a mismatch between your capacity to absorb volatility and the structure of your investments. That can and should be addressed. But the fix isn’t to abandon your strategy during the decline — it’s to adjust course during a more stable stretch, when clarity returns.
#3 Rebalancing Your Strategy
Rebalancing, often overlooked, becomes more valuable in market downturns. Rebalancing refers to the process of returning the values of your portfolio’s asset allocations to the levels defined by your investment plan.
If equities have fallen faster than bonds, your original allocation may be off-kilter. Bringing your portfolio back into alignment by trimming from areas that held up well and redeploying into areas that fell can help you stay disciplined without trying to time the bottom.
#4 Cash Reserves
Cash reserves matter here too. If your spending strategy in retirement involves periodic withdrawals from a volatile portfolio, now’s the time to make sure you’re not forced to sell at a loss to meet short-term expenses. Having one to two years of non-equity assets available can give you breathing room — and the confidence to leave the rest alone.
It’s also worth noting that some of the largest single-day gains tend to happen close to the bottom of market declines. Miss those, and your long-term returns take a hit that’s hard to recover from. So getting out at the wrong moment — even with good intentions — can have lasting consequences, not just temporary relief.
The best thing to do during a stretch of heightened volatility isn’t to tune out entirely or react emotionally — it’s to get reacquainted with your original plan. Review and confirm that your facts haven’t changed and let the math not your mood guide your next move.
Review Your Investment Strategy
Does your current investment plan earn its keep? It’s better to know for sure than guessing on this one.
You don’t need a new strategy every time the market shakes. You need a strategy that holds up — especially when it does.
A seasoned financial advisor at Consolidated Planning can help you pressure-test your current plan and make small adjustments without unravelling everything you’ve done. Sometimes leadership looks calm. Sometimes progress is simply not making an avoidable mistake.
Exp. 5/2027
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Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
This material contains the current opinions of James M. Matthews and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries.
