Investing isn’t for the faint of heart, especially when market volatility rears its unpredictable head. If you’re looking for expert advice, insights from a Director General and a CEO might be just what you need. In this article, discover strategies to reassess your portfolio during market turbulence and how to balance risk with defensive assets. Here are the top three insights from these financial leaders to help you navigate uncertain markets.
- Reassess Portfolio During Market Volatility
- Balance Risk with Defensive Assets
- Plan Ahead for Market Volatility
Reassess Portfolio During Market Volatility
A notable time I had to adjust my investment portfolio was during the 2020 market volatility caused by the pandemic. Like many others, I faced sudden fluctuations in asset values, which created uncertainty around the organization’s financial planning. To mitigate risks, I reassessed the portfolio, focusing on diversification. I reduced exposure to heavily impacted sectors, such as travel, and shifted some investments into more resilient areas like technology and healthcare. Additionally, I increased cash reserves to ensure liquidity, allowing us to respond to unforeseen expenses or new opportunities.
Patience was a key lesson from this experience. While it was tempting to react impulsively, taking the time to analyze trends and consult financial experts led to more informed decisions. Another takeaway was the importance of maintaining a long-term perspective. While short-term market dips were unsettling, staying aligned with our broader goals helped avoid unnecessary losses. This experience reinforced the need to build flexibility into any investment strategy. A mix of stable and growth-oriented assets allowed us to navigate uncertainty effectively. It also highlighted the value of staying informed and adapting to market conditions.
Fawad langah
Director General, Best Diplomats
Balance Risk with Defensive Assets
During a market downturn, I realized my portfolio was too heavy on growth stocks, which took a hit. I adjusted by reallocating to more defensive assets, like dividend-paying stocks and bonds, to weather the storm. This experience taught me the importance of maintaining a flexible approach and balancing risk. It reinforced the need to stay informed and to periodically rebalance based on changing market conditions.
Shehar Yar
CEO, Software House
Plan Ahead for Market Volatility
In 1987, Mike Tyson famously told a reporter, “Everyone has a plan until they get punched in the face.” Similarly, every investor wants aggressive growth until there’s a bear market. High returns and high volatility often go hand in hand, so investors shouldn’t be surprised by periods of high volatility. Even conservative investors should expect times of higher-than-usual fluctuations in the value of their investments.
With the prevalence of passive index investing today, it can be easy to forget some of the merits of more active management strategies. In the past, our firm has frequently used a more passive, broadly diversified strategic strategy as the foundation for portfolios. However, events like the COVID crash of 2020, the stock & bond bear market of 2022, and the narrow leadership of the recent AI boom have pushed us to favor more active management.
The key is to plan ahead of time for how to handle those periods of volatility. One great way to do this is to include a disciplined, data-driven tactical component to your portfolio. A good tactical strategy is dynamic and able to adapt to changing market conditions. This can reduce volatility in bear markets while still enjoying competitive returns in bull markets. The goal is to have a disciplined way to adjust investments to volatile or risky periods to prevent nervous investors from making emotional decisions that hurt their returns.
Ty Johnson
Financial Planner, Peak Financial Management
