Financial experts offer tips on how to develop a investment strategy for this year

The market’s volatility has investors on high alert, and for good reason.

Last year was the worst year for stocks since 2008 and only the second year the Dow and S&P 500 fell in the past decade. Wealth advisers suggest investors keep calm, fine tune investment strategies and look for opportunities.

“Though 2018 was a down year, we’re telling investors not to worry,” Joseph Weber, an accredited asset management specialist at Integrated Financial Solutions, said. “We acknowledge concerns over the trade ‘tiff’ with China and the worriedness the Fed is bringing, but a lot of things are pointing upward.”

Strong job reports continue, oil is under $50 a barrel and people should continue to see the benefit of the tax reduction going into the first quarter, he said.

“Market fundamentals are still strong, all things that point to a great 2019,” Weber said.

But there are movements in the market that ought not to ignored.

“I’m not sure anyone without speculation could provide an accurate assessment on the temperature of the 2019 market,” Noah Schwartz, certified financial planner with Blueprint Financial Strategies, said. “What is indicative though is year-over-year, the market is down, and that’s a great indicator of things moving forward. Markets tend to move in trends, and right now by almost any measure, we are trending down.”

Here are some ways to make the most of the current market:

Find opportunities

“The volatility and the pullback of the last three months have created enormous opportunities for investors with longer time horizons,” Dale Wong, president at Missio Investment Management, said.

He said it is not uncommon for the negative emotion to spill over and hurt the stock price of solid companies with earnings growth.

“Long-term investors should be seeking those companies with great businesses and strong management that will outperform the rest of the market over the next three to five years,” Wong said.

Reassess investment goals

Investors need to figure out how, or even if, the pullback has any impact on their long-term plans, Sean Gillespie, financial planner with Redeployment Wealth Strategies, said. Only if the answer to “if” is “yes” should they even be thinking about making any modifications.

He suggests being clear about the difference between saving for short-term things and investing for the long-term, and planning accordingly.

“If anything in your portfolio is intended to be spent in the next two or three years, it most likely doesn’t belong anywhere near the stock market in the first place,” Gillespie said.

For example, for those in retirement, a minimum of next two-years’ retirement income should be allocated to something that looks a whole lot like cash, he said. Same thing goes for anything else set aside for the next few years.

Revisit risk tolerance

Even if there are long-term goals, it is not easy to ride out a downturn in the stock market. How much one can stand is a personal decision.

“Revisit your risk tolerance and make sure you have the right mix between stocks and bonds,” Robert Stromberg, certified financial planner with Mountain River Financial, said.

Within the equity portfolio, he suggests diversifying investments across the United States, international developed and emerging markets.

“Pick a percentage allocation to each and rebalance annually to those target percentage allocations as they drift over the years,” Stromberg said.

He also suggests adopting a value tilt in the stock portfolio.

“Growth stocks have outperformed value recently but value has historically, and repeatedly, outperformed growth over long time frames,” Stromberg said.

Sit tight

“My advice is to turn off the TV, close the paper and do nothing at all,” Charlie Horonzy, certified financial planner and a certified public accountant at Focused Up Financial, said.

He said even those who did nothing in 2008 were handsomely rewarded with the market coming back from 2009 to today — a nearly decade-long bull run.

How comfortably you are sitting tight may depend on age. Those nearing retirement or on a fixed-income may have more urgent needs. Those settling into a solid long-term investment plan, over time, are likely to see a positive return.

“On average, the return on the market is 10 percent,” Horonzy said. “One of the worst things to do is try to time the market and make certain moves. If you go this route, you then have to ask yourself not only when to get out but when to come back in. If you got out in 2009 and didn’t get back in, you missed this whole bull market.”