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The stock market is down. What should I do? Thumbnail

The stock market is down. What should I do?

By: David M. Foster, CFP®, CAP®

Well, it’s official. As of the day and time that I’m writing this (Noon on 01/24/2022), the S&P 500 is officially in correction (a 10% drop from all-time highs) territory. The last time this happened was right at the beginning of the pandemic in February of 2020. I don’t know about you, but to me it feels like that was forever ago! Once the market recovered in late summer that year, it has gone, more or less, straight up with very few bumps in the road. With that preamble out of the way, here are some of my thoughts:

Why is the market down so far this year?

The “nice” thing about the decline in 2020 is that there was no mystery as to what caused it. Usually, there are a million different factors, some big, some small, that contribute to the moves in the market both to the upside and the downside, but here was a singular cause that could explain nearly 100% of what we were seeing.

What is causing the decline we are seeing over the last few weeks? Is it because we might be on the brink of a military conflict with Russia? Is it because we’re seeing inflation levels we haven’t seen in decades? Is it because the Fed is going to start increasing interest rates? Is it because the market has just gotten out ahead of its skis over the last couple years and some people were looking for an excuse to sell? Yes, yes, yes, and yes. 

If you don’t already, here is what you need to understand about the stock market: volatility is the price of admission. You want the higher returns of stocks? You must be willing to put up with the fact that, sometimes, you have to take a step back before you can take two steps forward.

So, what should I do with my money right now?

Of course, if I knew exactly, or even approximately, when the market was going to peak and when it was going to hit its nadir, I would get all of my clients’ money and my own out of the market at the top, and back in at the bottom. But, neither I nor anybody else can reliably and consistently call market tops and bottoms. Just as “Democracy is the worst form of government except for all those other forms that have been tried from time to time,” investing in a globally diversified portfolio of stocks and bonds based on your time horizon for the money and then holding onto that allocation is the worst way to invest except for all the other ways. (Ok, so Churchill’s quote was a bit more elegant than mine, but you get the point😊)

Your circumstances are the only thing that should cause you to change how you invest. If you now think you’ll need your money sooner than you previously expected to need it, that could warrant a change in your allocation between stocks and bonds. However, that would be true whether the market was up 10% or down 10%.

Putting It All Together

To summarize, I’m not worried about what is happening in the markets right now, because I know that none of the money that I have in the stock market is money I’ll need for a decade or more. And, even if the market falls another 10 or 20% from here (which it absolutely could, even if it that is unlikely) I’m still highly confident that stocks are likely to provide me with a better return than any reasonable alternative over that time horizon. Of course, you may be several decades older than me, and, thus, have a shorter time horizon for your money. But, you probably (hopefully!) also have a lot more money in bonds and/or cash than I do to account for that fact.

If, after reading all of this, you still have concerns or questions, I’d be happy to chat with you. Feel free to click here to view my calendar to schedule a meeting with me to discuss further. Have a great day!

Why is the headline image for this post a pair of Golden Retriever puppies instead of a scary looking chart of the stock market? Because wouldn't you rather see a picture of a pair of Golden Retriever puppies😊?


Hi, I'm David Foster! I wrote this blog post, and I am also the founder of Gateway Wealth Management, LLC. I hope you found something valuable in what you just read.  If you'd like to read more about me, click here. If you'd like to read more about my firm, click here. Thank you for reading!


The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. Past performance is no guarantee of future results.