Despite the pandemic and its severe financial shockwaves, the US stock market is up significantly over the last 18 months; however, the economy is still technically in a recession. The Business Cycle Dating Committee, a panel that acts as the official referee on the US economy, has not yet named an end date for the 2020 recession.

These contradictory messages, combined with rising inflation and increased government debt, lead many to think that we may be on the brink of a major downturn. As wealth managers for decades, we’ve learned that no matter how strange the market may seem at times, it’s best to ignore emotions. Even those that lead us to think the market “should” behave a certain way. Instead, we believe it’s best to step back and take a long-term, objective perspective.

Our thoughts on the current market? While we wouldn’t be surprised if the market took a breather here (even a 10% to 20% decline), we’re not necessarily expecting it.

Long-term investors should not fear downturns – Regardless of short-term action, we believe long-term investors should expect, not fear, downturns. Periodic weakness is a natural part of the process. We’d actually be more concerned if things went up in a straight line without some scary bumps. Just like a sprinter needs to stop for rest between spurts, short-term market declines are normal and healthy for the market.

Market drops can spell opportunity – While many fear periods of market weakness, these can have significant benefits. In the words of famed investor Shelby Cullom Davis, “You make most of your money in a bear market; you just don’t realize it at the time.” During market declines, we can find bargains in the form of solid companies trading at good discounts to our estimate of their valuations. Who doesn’t love a sale?

Times to be careful – For our clients, their time frame is our focus, not market timing. If you’re investing for a short-term goal (less than ten years), you may want to consider limiting your exposure to stocks.  You don’t want to find your portfolio dramatically lower when you need to make a withdrawal.

Focus on time in the market (not market timing) – If you’re investing for retirement (or other long-term goals), your best bet is to focus on time in the market so that you can take advantage of compounding returns. Market timing is the term for those who attempt to sell at highs and buy back at lows. While this sounds ideal, research shows it usually backfires, dramatically reducing your returns. In fact, research shows that staying invested helps you benefit from the market’s best days, which often follow the worst ones.

There are other strategies you can employ. For those in or near retirement, we often advise clients to maintain three years of living expenses in cash. This buffered approach can go a long way in shielding you financially, and more importantly, emotionally, when the market gets rocky. 

As a registered investment advisor, Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them work towards their financial goals. We have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: or call 410-732-2633. The opinions here are for informational purposes only, not specific advice to any individual.

Author Profile

Woody Derricks, CFP®
Woody Derricks, CFP®
Throughout my nearly 20 years as a Financial Advisor, I have seen some of the best and worst markets in our history. That experience allows me to approach my clients with the knowledge of how the markets fit into their greater financial picture. At Partnership Wealth Management we help everyday people who have accumulated wealth make sense of what they have and work with them to maximize their financial opportunities in a relaxed, comfortable, and professional environment. While we help people from all walks of life, many of our clients are same-sex couples searching for a knowledgeable, LGBT-friendly financial advisor to help them with their unique financial planning needs. I am a CERTIFIED FINANCIAL PLANNER™ professional and have the Accredited Domestic Partnership Advisor(sm) designation. As a Registered Investment Advisor, we are not tied to any company’s investment products allowing us to provide unbiased advice by offering a wide array of investments and other products to our clients. Since 2001, I have been writing articles on financial planning for several regional newspapers and have been a guest speaker on LGBT financial issues for various local and national organizations. Additionally, I have conducted financial planning workshops for large corporations and government agencies. Non-Profit Work I believe that it is important to give back to the community and currently serve as the treasurer for FreeState Justice and as a co-founder/president of Paws for a Cause. I’m a current member of several LBGT, environmental, and local community groups. Personal My wife, Heidi and I enjoy camping, hiking, and traveling with our daughter, Elise, and our dogs, Fenway & Roxy. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.