Keeping Calm When Volatility Strikes

The recent drops in the stock market can lead to a lot of questions and concerns about what investors should do. Considering the market has been on a historic run to continuous record highs and double-digit gains over the past year, it’s not entirely unexpected to experience a pullback.

At Franklin Templeton, we’ve been investing in global markets for more than 65 years, across bull and bear markets alike. We know that while volatility can be unnerving and confusing, it can also be a time of great opportunity for investors. Here, we share some thoughts and experiences of handling the highs and lows of financial markets to help you put the current market activity into perspective.

Even the most experienced investors can get spooked by heightened volatility in financial markets. When stock prices are tumbling, the urge to do something—anything—can be overwhelming. Our brochure, Five Things You Need to Know to Ride Out a Volatile Stock Market, provides a handful of strategies for investors who may be wondering how—or if—to respond to turmoil in the market. It includes some thoughts on resisting the urge to convert your investments to cash.

Our experience has shown us that selling is not always the most appropriate response to market turmoil.

Although short-term volatility swings can be difficult to stomach, we believe it’s important for long-term investors to persevere. While it may be tempting to pull out of the stock market, investors may miss out on a potential market rebound and opportunity for gains while they are on the sidelines, as this one-pager entitled The Case For Staying Invested illustrates.