Key Points to Flourishing in a Turbulent Market

It’s a no-brainer that when the market is volatile, individuals and organizations tend to get a little antsy as they watch their stocks plunge into the deep end. It becomes a very real issue though when the economy reaches a breaking point and jobs become at risk. So, how do you survive, or even thrive, during uncertain economic times?

First, take a look at the players that are consistently evolving to see how they adapt.

Organizations that stay afloat for many years are the ones that are most adaptive to changing scenarios, whether it be a financial crisis or internal processes that arise. These successful companies adopt new technology, switch over to new ways of selling their products and services, and even completely shut down services or products that are no longer useful. Ultimately, organizations that continue to offer value, especially during rough economic times, are those that will continue to succeed for years to come.

Take insurance companies as an example; the insurance industry is continually changing to fit into ever-changing requirements and expectations. Even in a solid economic market, insurance companies are battered with financial restrictions and conditions; they are professionals at adapting, not just during difficult economic times. A successful insurance company, such as Artificial, doesn’t wait to make swift changes when they have to. If they do, it’s already too late. Instead, successful companies and individuals take advantage of changing economies by planning in advance, then moving on those plans at the right time.

McKinsey, a management consulting firm, examines how insurance companies take challenges and rise to them in their report titled Building a Culture of Continuous Improvement in Insurance, noting “Organizations need the capacity to meet challenges as they arise: new regulations,[and] capital-market volatility.”

So, how do you apply that to the individual? In it’s most basic terms, rise to the challenge, be adaptive, and use volatility to your advantage. Take advantage by investing stocks that you couldn’t think about affording in a less turbulent market, but be aware that day-trading might not be the wisest choice right now.

Another key takeaway from large corporations is to be fully aware that how you create income may need to change drastically. If you have been waiting for the perfect time to purchase a certain stock, don’t second-guess yourself if you’ve done the research just because a market is no longer making huge strides.

Secondly, don’t panic.

Volatility shouldn’t be considered abnormal. It’s easy to make a gut reaction and overreact when the market takes a plunge, but it may be the absolute wrong approach to your individual finances. Take a deep breath, and steady on. Again, if you’ve done appropriate research, don’t overreact to a turbulent market. Simply put, selling when you’re down isn’t how the rich get richer.

Uncertainty can be overwhelming, but reacting, rather than being proactive, is not the ideal way to make economic decisions for yourself or business.

Instead of doubting yourself, or the market, remind yourself that turbulent markets are not volatile forever. Over time, economies get back on track and smooth out. However, they take time, potentially years longer than what most of us want, and they have far-reaching consequences that aren’t easily seen unless you dive into research.

This leads to the next point; every financial crisis is different despite many people comparing them. You can look at previous volatile markets to see how they were handled, but notice the differences more than the similarities when you do this. It’s key to know that one financial crisis may affect a specific market segment and leave another completely unaffected. The housing bubble of 2008 had different consequences, both short and long term, than the 1980’s recession of the United States. Yes, people lost jobs and income, but there are more differences than similarities. A great article that highlights some of the stark differences between just those two recessions is written by economic columnist Jon Talton, who notes, “it’s also important that we understand how today’s economic disruption is different.” Take the time to become knowledgeable about the industries that you are directly affected by before making swing decisions about your financial future. Some great resources, other than this blog, include YouTube videos such as MIT OpenCourseWare that explains some of the basics of microeconomics. Even learning the appropriate terms can help you feel more more educated in making decisions for your investments.

Furthermore, If you are not a full-time investor and do not feel equipped at making large decisions, don’t feel like you have no way to improve your situation. There are thousands of financial professionals that offer a variety of sources, from full investment to online consulting.

Make the time to get ahold of a professional financial advisor. A financial advisor can work with your lawyer and your accountant to help find the best investment strategies for you if you’re unsure of what you should be doing during a volatile economy. If you do not currently have a financial advisor, one of your best options in finding one may be going straight to your CPA who can help you locate one. If you already do your own taxes though, you’re not out of luck. From word-of-mouth to several online options, this list may help you locate one that will fit your budget.

Now that you know where to find one, check out an earlier blog on what attitudes or experiences your financial advisor should have for you to implicitly trust them. It can’t be overstated that the person that is in charge of your finances should be someone you have complete faith in. You don’t need to be best friends, but you do need to be able to have difficult conversations with them. Many people view their financial advisors as a banker, but open communication is crucial in understanding where your finances are, and what you can expect from them financially. Even if you aren’t a full-time investor, it would behoove you to know what is in your portfolio, and a solid advisor will ensure that information is readily available for you.

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