Surviving Market Ups and Downs

Aug 25, 2022

No one likes to be whipsawed, and this year has left investors riding on quite the rollercoaster. If 2021 was the lift up to the first drop, well that hill peaked in January, and we’ve all been going through loops ever since. But whereas theme park rides are meant to be fun—for the most part—the financial market ride in 2022 is not leaving all its visitors with such pleasant memories.

The latest twist and turn has been back up. July and into August have brought a sizeable stock market recovery from the June lows. No small bounce indeed, and a very welcome sight considering all the pessimism and negativity permeating market psychology earlier this summer.

So where does that leave investors today? This late-summer rally does not change our cautious outlook for both financial markets and the economy. We believe the economy is slowing and in a late cycle phase, and we view market risk as elevated. Instead of chasing this rally, here are five timeless truths we recommend all investors keep in mind as we head into the final third of the year:

  1. Focus on the future, not the past. Much in the same way that markets don’t go up in straight lines, they also don’t go down in straight lines either. Most bear markets have multiple periods of positive returns within them, also known as bear market rallies, that do not last until the end. If you’re feeling a sense of FOMO (fear-of-missing-out), remember that while markets can move quickly on short-term noise, fundamentals that underpin them evolve much more slowly. Our belief is that, over time, fundamentals always win out, and investing decisions made for the long-term are much more likely to deliver the kind of results that will actually last.
  2. Resist the urge to ‘just do something.’ When markets get choppy, its human nature to want to take back control (also known as action bias). But what happens to financial markets in the aggregate is far outside of your control. Often the changes investors make during these volatile moments are the most counterproductive ones you can make. Instead, we advise revisiting your goals and objectives to be sure you are on track. If during that review process, you then discover that strategic, long-term adjustments are warranted, then in that case, don’t hesitate to make them.
  3. Do not abandon your financial plan. This advice may seem like it is at odds with our outlook, but one of the biggest mistakes an investor can make is not investing at all. If your goals and objectives call for an investment portfolio that is some type of mix between stocks and bonds—known as your strategic asset allocation--then it is absolutely essential that you stick to your long-term strategy! Being cautious is very different than not investing at all, and our team continues to find select opportunities they like today.
  4. Put cash to work. Similar to the third piece of advice, excess savings (whether from growing savings accounts, real estate sales, expiring bank CDs, etc.) should be considered as assets alongside your entire financial plan. If it makes sense and fits your financial plan (see point 3 above), then consider putting your extra cash to work today. There is no better time to bolster investment portfolios with fresh inflows than when the market is materially off from its highs. Consider strategies such as dollar cost averaging to edge in if you prefer a more cautious approach.
  5. Ask questions. As investment professionals, we live and breathe financial markets. This is what we do all day every day. Everyone from our Financial Consultants to our Advisory Services teams to our Investment Research professionals are all here to help with their own particular areas of focus, and they’re happy to provide advice on any concern you have. It’s better to collaborate with a team to work through any questions, so don’t be afraid to use yours.

Every market downturn is different, but there are some investing truths that remain the same no matter how uncomfortable and uncertain markets become. If you’re feeling anxious about where your portfolio stands, please contact us to speak with a member of our team. We’re happy to help.

Our research team continues to monitor these topics and more. If you’re interested in hearing more of our monitoring points and views on an array of investing themes, then subscribe to our insights.

This material contains the opinions of Manning & Napier Advisors, LLC, which are subject to change based on evolving market and economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product.

Want regular insights into financial planning and investing-related topics?



Sign up to receive the latest financial planning and investment tips and news.

View all Preferences