While financial markets tend to rise in the long run, short-term volatility can be alarming for investors. Recent swings have been driven by economic policy shifts, persistent inflation concerns, and geopolitical uncertainty – all of which may unnerve even the steadiest of clients. During turbulent periods like these, advisors play a critical role in helping clients maintain perspective and stay grounded.
In this article, James Liu, CEO and founder of Clearnomics, and Lindsey Bell, the firm’s Chief Market Strategist, present ten charts to help advisors contextualize the current market environment. Each visual is paired with talking points designed to help advisors reframe volatility in a way that speaks to clients’ concerns.
As a starting point, it’s helpful to reinforce that investing success isn’t about timing the market or picking winning stocks, sectors, or asset classes. Rather, it’s about constructing a portfolio that aligns with a client’s long-term goals. While stocks have recently declined, bond yields are above historical averages – highlighting the importance of maintaining a diversified mix. And while cash can feel safe, it often fails to keep pace with inflation, especially in turbulent markets. In that same vein, diversification remains the core of a healthy portfolio to protect against market corrections and underperformance, as no single asset class outperforms indefinitely.
It may also be helpful to discuss the drivers of current market corrections. Advisors might acknowledge that inflation and political uncertainty often elicit market reactions, and that many economic policy decisions can be controversial and divide public opinion. Nevertheless, history shows that markets have performed well under both political parties. Much of what’s happening now reflects companies adapting to present-day challenges – from higher input costs to shifting consumer demand. Advisors can guide clients’ attention to where growth is happening and to areas of economic resilience – such as persistently low unemployment – that are often overlooked in negative news cycles.
Finally, advisors can emphasize that while market corrections never feel good, they are a natural part of the investing cycle – just like market recoveries. And because recoveries are difficult to time, the best thing investors can do is to stay the course and focus on long-term goals. Advisors are uniquely positioned to offer not only perspective and education, but also empathy and reassurance during tough market periods when clients may need it most.
The key point is that challenging market environments give advisors the opportunity to tailor talking points to a client’s specific anxieties. Being well-informed about the market influences, remaining empathetic, and maintaining a long-term perspective are all crucial to guiding clients through market corrections. And, while unpleasant, tough market conditions offer a way for advisors to explain the critical role of a well-diversified portfolio, demonstrate their knowledge, and ultimately affirm their long-term value!
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