With nearly 40 years of industry experience, there are several market drawdowns that stand out in my mind, each of them with their own characteristics. We’re hearing a lot about volatility today, and we often do when the S&P 500 dips. But it’s important to remember that volatility applies just as well to times when it’s up. After all, the definition of volatility is the tendency to change quickly and unpredictably.1 In short, volatility is our constant companion and inherent to an investment experience in a dynamic world. It’s with this understanding that CCM designs portfolios optimized for volatility that swings in both directions—positive and negative.

Despite this, it’s easy to feel discouraged during times of less-than-favorable volatility headlines. Here are a few key points to keep in mind:

  1. You’re not invested in just one market; there are many markets within "the market." Because of this, it’s important to consider the performance of market segments. And that the market segments you own are uniquely designed to support your financial goals. We provide you with a disciplined investment strategy that accounts for volatility. Rebalancing the segments where you’re invested is one of the key tools we use to accomplish this. As a result, a headline describing the market as “down” can be deceiving since it doesn’t represent your investment mix.
  2. Communicate your cashflow needs with your advisor. Through ongoing conversations about your 1–3 year goals, we can plan for them and leverage volatility to your benefit so your plans do not need to change and you don’t have to accept unfavorable prices that may compromise your long-term goals.
  3. We know the returns are there—it’s why we’re invested in equities in the first place. And, put simply, if your line isn’t in the water, you can’t catch the fish. Electing to exit the market on the account of poor timing automatically creates a second decision—when to get back in. It is our firm belief—one that is well researched and detailed here—that trying to time the market is futile. Rebalance and adjust for your risk—of course. But don’t depend on a strategy that times the markets.

We understand the many emotions that accompany the investment journey and we’re honored to walk alongside you through them all. I can assure you of three things: volatility is normal, the emotions you feel as a result of volatility are normal, with your partnership and candor, we know just what to do to help you navigate volatility on the path toward achieving your financial goals. Thank you for the trust you place in CCM. We’re delighted to serve you.

  1. Merriam-Webster

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.
PLEASE SEE IMPORTANT DISCLOSURE INFORMATION.