If you or your clients are prone to reading the headlines, then the last few weeks have probably felt quite disheartening. Many of us have been through this type of rollercoaster ride with the markets before, and while it is painful while you’re in it, we know that there’s another side that we will eventually come out on with more learnings that will help us navigate the markets moving forward.
That said, knowing that we’ve been here before probably doesn’t do much to assuage your clients’ concerns in the short-term. We’ve prepared some talking points that will help you guide your clients through this rocky period.
Markets are Down
The market is in turmoil. Tech stocks in particular have dropped almost as much as they did during the onset of the pandemic. While the markets are down, the everyday essentials are way up. Gas prices just hit a fresh all time high in many places across the country, dashing the hopes of everyone who thought the downward trend would continue.
In crypto, everything, and we mean everything, is down. BTC and ETH are both getting hammered and lows not seen for years are becoming common. LUNA, a crypto tied to the U.S. dollar has lost 98 percent of its value in five days, sending shockwaves through the crypto community and amateur investors. If you have clients who’ve invested in crypto or NFTs, it might be a good time to help them rebalance their portfolio.
As always, using your RIA software to show your clients the best balance of their portfolio given their individual risk is a great way to get out ahead of their concerns and to show them projections over the next few years given historical data and context.
Essentials are Up
Food prices, consumer inflation, and producer inflation are up, up, up. This perfect storm seems to be stretching the middle class and those on a fixed income thin, which is negatively impacting the outlook for many companies moving forward.
The persistent inflation is hammering markets and those holding static dollars in their accounts. However, just because things look bad now, doesn’t mean that it’s a trend. And while acknowledging that things don’t look great right now is important for building trust, it’s also prudent to explain to your clients, proactively, that what they are seeing now won’t last forever and that there are measures they can take now to ensure that their portfolio weathers the storm.
Take the Longview
Markets always go up. If you take a long view of the S&P, DOW, or your favorite index, it points in one direction. Progress pushes more and more wealth to more and more people which is ultimately reflected in the market. Remember 2008? Of course you do, but we made it through, even if a bit bruised.
Most experts still believe that the Fed will be able to curtail inflation and put us back on the path toward normalcy. Whether this will happen remains to be seen, but they have done it before and likely can do it again.
There’s no doubt that your clients’ portfolios are getting raked across the coals. It may get worse, it may get better, but one thing that’s for certain is that panic selling is never the answer. For those able, this is likely a great time to buy more assets instead of selling. New lows could mean good returns in the years to come.
You can’t control the market. All you can do is communicate to your clients that you’re here for them and that they will likely emerge alive and well, even if they have to sacrifice a little bit in the short-term. Keeping a perspective on how much wealth we enjoy in the U.S. is a good way of contextualizing a dip in the market. We’re still able to enjoy plenty more than most parts of the world, even when the markets are red.