Many of my clients have come to me lately concerned about market volatility. They’re worried that the daily shifts in government policies and the fluctuations in the stock market are putting their portfolios at risk. While it can be unsettling, market volatility is a normal part of long-term wealth building.
Understandably, most of them ask me questions like What does this mean for my portfolio? Should I be making changes? How do I safeguard what I’ve built?
My first response is to put their minds at ease. As a seasoned wealth management firm, Deerfield Financial Advisors has guided clients through market cycles like this before, drawing on experience to help navigate uncertainty and protect long-term goals.
I tell clients that market fluctuations are inevitable. The key to enduring market volatility is utilizing a well-planned strategy that mitigates unnecessary risk and maintains focus on the big picture.
It’s times like these when our firm shines.
The Importance of Diversification During Market Volatility
Let’s start by taking a look at the importance of diversification.
While diversification has been a fundamental concept of sound wealth management for many years, it’s often overlooked when the market is thriving.
Here’s how that concept plays out.
Diversification means building your portfolio so it’s made up of a variety of asset classes (stocks, bonds, commodities, etc.), industries, and geographic regions. If one investment performs poorly, the other investment may compensate for those losses, leading to more consistent returns over time.
But due to the dominance of U.S. stocks during the last 10 years, some investors have concluded that diversification beyond domestic equities isn’t worth it.
The momentum is shifting.
After years of lagging, foreign stocks are finally catching up. As interest rates settle and bond prices increase, bonds—often considered the dull, underappreciated players in a portfolio—are providing meaningful returns.
This is exactly why diversification is one of the pillars of our wealth management approach.
No doubt it’s easy to get sucked into reacting to stock performance trends, but a balanced portfolio confirms your financial position is structured for all kinds of economic cycles, not just the one that’s currently trending.
The Bond Market’s Quiet Comeback
The current rally in bonds is significant.
As recently as a couple of years ago, as rising interest rates drove down prices of more alluring investments, bonds were a tough sell. Now we’re witnessing a reversal—bond prices are rising, and for clients with diversified portfolios, this is helping level out volatility.
Bonds are currently doing precisely what they’re intended to do: provide stability and income. This is particularly good news for retirees and conservative investors looking for a reliable income stream.
That’s why at Deerfield, we incorporate individual, high-quality bonds (not bond funds) as fixed-income investments into our clients’ portfolios. We do this as an intentional strategy, not just as a safety net.
Market Volatility Doesn’t Mean You Should Panic
Staying the course during uncertain times is one of the hardest things for investors to do. We get that.
It’s a natural human reaction to want to do something proactive to respond to market volatility. But the truth is that knee-jerk reactions most often result in poor financial decisions, like over-concentrating in particular market segments, missing out on rebounds, or selling at the wrong time.
At Deerfield, we’re in it for the long haul. We don’t make long-term decisions based on short-term trends. Instead, we design resilient portfolios, make adjustments on an as-needed basis, and continue moving steadily toward your financial goals.
Keeping Perspective: The U.S. Economy’s Strength
The U.S. economy continues to be the strongest in the world.
Admittedly, the daily short-term uncertainties and shifting policies are unnerving, but the pillars of economic growth are still in place. Consumers are still spending, companies are still innovating, and long-term investment opportunities remain.
In light of this promising news, we remain optimistic. Our clients continue to gain from our disciplined strategy supported by careful diversification and an emphasis on high-quality investments.
What Should You Be Doing Right Now?
Here are 5 key takeaways for this current market volatility:
- Avoid overreacting: Making knee-jerk financial decisions during uncertain times can be costly. Try to remember that strong recoveries typically follow market downturns.
- Lean on bonds: If you’re retired or have a conservative portfolio, your bond holdings are likely serving their purpose of lowering risk and offering stability.
- Stick to your plan: Your portfolio was designed with long-term objectives. Volatility doesn’t change those goals.
- Rebalance if needed: Periodically rebalance your portfolio to keep it aligned with your investing goals and risk tolerance.
- Reach out: If you have any questions or concerns, get in touch. We can help you navigate market volatility with confidence.
At Deerfield Financial Advisors, we’re watching out for our clients’ portfolios, making careful adjustments when necessary, and keeping a steady hand on the wheel.
Contact us at (317) 644-7701 or email mroop@deerfieldfa.com.
About Matt
Matt Roop is Wealth Manager and Shareholder at Deerfield Financial Advisors, a fee-only financial advisory and wealth management firm with offices in Indianapolis and Chicago. In his role, Matt serves as a personal “chief financial officer” for his clients, overseeing every facet of their financial landscapes, orchestrating strategies to grow their wealth, and enhancing their financial clarity. Catering to the specific needs of his clients, whether lawyers, engineers, or business owners, he empowers them to embrace their passions and lead their optimal lives. Matt conveys a depth of experience and a calm demeanor that clients find reassuring, and he loves providing peace and confidence around their financial future.
Matt received a Bachelor of Science from Indiana University and a Master of Business Administration (MBA) from George Washington University. He is a NAPFA Registered Financial Advisor and holds the CERTIFIED FINANCIAL PLANNER® and Certified Exit Planning Advisor (CEPA) designations. Committed to staying at the forefront of his field, he is actively involved with the Exit Planning Institute, National Association of Personal Financial Advisors, and the Estate Planning Council of Indianapolis. Since 1997, Matt has been involved in the investment and wealth management realm, with experience at Charles Schwab & Co., Inc., as well as a boutique Indianapolis-based independent advisory firm and a brief stint supporting his family’s closely held business.
Outside the professional realm, Matt serves his Indianapolis community by volunteering for Meals on Wheels of Hamilton County and is on the Executive Leadership Team for the Indiana Alzheimer’s Association’s Walk to End Alzheimer’s. He is dedicated to financial stewardship and continuous growth, with an unyielding commitment to enhancing the lives of both his clients and his community. Matt and his wife, Kimberly, reside in Carmel, IN, with their four children, who are all pursuing their college dreams. When he’s not working, he enjoys traveling, reading, and spending time at his lake house in southern Indiana with family. To learn more about Matt, connect with him on LinkedIn.
