5 tips to riding out the volatile stock market

Investors were seeing red Monday as they looked at their portfolios while the stock markets continued to drop.

But local financial planners advise to remain calm despite the fluctuations, knowing that the 10 percent market correction may be a short-term issue.

Several North Texas financial experts said Monday that their phones have been relatively quiet during the recent stock market tumult, as clients are maintaining a long-term approach to investing.

“Having been through the downturns of 2008 and 2009, they know that the long term is bright and you can’t just look at the markets between now and December,” said Alison Geiger, managing director of Heritage Financial Planning in Dallas. “They know to give it some time and not to look at their portfolio balance every day.”

Here are five tips that financial experts are passing along to clients to help them cope with Wall Street’s wild ride.

1. Don’t keep the market charts up on your computer screen.

If you have CNBC or Bloomberg News playing in the background, your emotions will get the better of you, says Jerry Singleton, chief executive of Signal Securities in Fort Worth.

“I tell a lot of my clients to turn off the TV and throw away the magazines and just stick with your long-term plan,” Singleton said. “We look at the market as a marathon and not a sprint; therefore you have to just ignore the shakes out there.”

Investors should never make business decisions when they are having an emotional reaction, he said.

2. Know how much risk you are willing to take.

Investors should take a long-term approach to their investment portfolio, and that includes knowing how much money you’re willing to place in equities, said Dennis Carpenter, president of International Wealth Ministries in Grapevine.

“If you cannot withstand a pullback within the next five years, then you should not be in the market,” Carpenter said. “If you need your money in less than five years and are planning to retire in three years, you really need to consider diversifying your portfolio.”

3. Keep bonds as part of your investment portfolio.

Even though yields have been low as the Federal Reserve keeps interest rates low, bonds should be still part of an investment portfolio.

Byron Green, president of Green Investment Management in Fort Worth, said the outlook on bonds has not been favorable, but including them in an investment strategy gives a portfolio balance.

“Most clients are going to find that having bonds in their portfolio gives them a counterbalance to equities,” Green said. “When things go like they are right now, the bonds are the only offset you have to the equity part of your portfolio. It gives good balance.”

4. There are some good buys in the market right now.

When the stock market drops by 1,000 points as it did on Monday morning, investors with some extra cash will find some great deals.

Aspen Wealth Management President Helen Stephens said the low stock prices give investors an opportunity to rebalance their portfolio if their equity portion is too small.

“This morning, some of the stocks were off so much it was just shocking, the value that is there,” said Stephens, a Fort Worth financial planner. “There were definitely some buying opportunities.”

5. Don’t sell your stocks in a down market.

Selling stocks in a down market in a panic is exactly what financial planners say not to do.

“It is not smart investing if you think about throwing in the towel and selling when the market is near the bottom,” Geiger said.

Geiger said if an investor sold stocks at losses Monday morning, they would have taken larger losses than if they had waited since stocks went back up by midday.

“It is very important to stay the course and listen to your financial planner and not let your emotions get the best of you,” Geiger said.

This story was originally published August 24, 2015 at 2:15 PM with the headline "5 tips to riding out the volatile stock market."