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Stock Market Declines: What Should You Do Now?

RL118 - Stock Market Declines: What Should You Do Now?

Today on the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson talk about the 2022 market decline and possible responses. They break down how the markets typically respond to historical declines, the role of inflation in market volatility, and how to handle volatility in retirement.

[05:01] The Stress of Market Volatility

[08:30] Market Volatility and Historical Comparisons

[12:04] Historical Declines in the Bond Market

[13:46] Price Movements in the S&P 500

[16:38] What To Expect After Historically Low Declines

[24:24] Investor Thinking After Record Declines

[28:00] Deals and Opportunities in the Current Market Environment

[30:45] A Guide to Investing in the Current Market

[37:50] Positive Annual Returns and Intra-year Declines

[38:40] Ideas Into How to Handle Volatility

[40:50] Why Volatility Matters For Retirees

[44:01] How to Handle Market Volatility in Retirement

[47:30] Understanding Short Positions When Investing

[51:30] The Role of Inflation in Market Volatility

[54:10] Why Behavioral Finance is the Key to Managing Volatility

[01:01:33] Stick With Your Plan: Accept and Expect Volatility

[01:04:10] Parting Thoughts

For more links and the full show notes keep scrolling down!

Roshan Loungani can be reached at or at 202-536-4468.

Erik Olson can be reached at or 815-940-4652.

Adrian Nicholson can be reached at or at 703-915-8905.

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Full Show Notes:

Key Factors Influencing Market Volatility in 2022 and Historical Comparisons

The markets will always be volatile, particularly when you combine unpredictable economic events, crowd behaviour, and instinctive fear. For example, selling by investors drives more investors to sell, leading to a downward spiral in price. Another great example is the Russia-Ukraine war that played a hand in the market slump of early 2022. That said, we all know that the markets tend to recover, no matter the decline. And if you are a long-term investor, you also understand that time horizon perseverance often proves beneficial.

However, what we all want to understand is how the markets behave after extremely low declines. Historical analyses offer a blueprint for gauging what to expect after a steep decline and help guide trading decisions. If you analyze the intra-year declines, you’ll quickly notice that market volatility is a normal part of investing. And while the markets have not been kind to investors in 2022, this is not the time to think short-term or even try to micromanage the volatility. Instead, try and use historical trends and evidence that will help you take advantage of the market dislocation.

Why Volatility Matters For Retirees

We all plan to retire one day; we save for retirement during our working life to guarantee that we retire comfortably. This is also why we invest in accounts that let us invest over the long term or give you tax advantages. However, saving for retirement also means that your retirement savings will be subjected to market volatility. In fact, if you’re already in retirement, it would be best if you acknowledged that volatility isn’t your friend. It’s not a small bump on the road but will have consequences for your retirement plans depending on when you’re pulling from your portfolio and the rate at which you’re pulling out. Fortunately, taking some basic steps such as moving money towards more stable investments or diversifying your portfolio can help you manage this risk.

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All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.

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