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What's Important To Focus on When Managing Your Investments In Volatile Markets

Romans 12:12

Be joyful in hope, patient in affliction, faithful in prayer.

With a drastic shift in the markets, I felt it was necessary to put the markets into historical perspective.

Michael Batnick, CFA, is the Director of Research at Ritholtz Wealth Management LLC and he recently wrote a beautiful article that addressed this stance.

In the above image, it shows the Dow Jones Industrial Average and it is easy to see that periods of flat returns are normal and that even with a sudden downturn in the market, that over the course of a longer time horizon, those who stay invested, easily understand that, this too shall pass.

What is more important than the current returns of the market? The asset allocation of your portfolio. As many seasoned investors understand, all asset classes go through cycles. And attempts to make drastic shifts based on irrational market behavior, will cause more downside risk, than upside potential.

Batnick states, "Nobody knows where stocks go from here. Not Warren Buffett or Jim Simons or anyone else. The good news is that seeing the future is not necessary for achieving success in financial markets. What you do need is a plan. And nobody who’s selling all their stocks today has a plan because nobody’s plan is to panic sell. If you’re trying to grow your wealth, and I don’t know any other reason for investing, then part of the plan has to include living through discomfort. Any strategy that’s predicated on all upside and no downside is [censored]." (Batnick, 2022)

The point is to have a realistic plan. Returns will not always be a straight shot up. The market will have these periods of flat or negative returns and it will get uncomfortable. But we must take a bird's eye view of the situation. There is a reason that for the past 20 years, the average investor without professional help, only yields roughly 2.9%, which is a difference in profit returns of 81.46%. Compared to the 7.5% an investor could have made investing and holding in the S&P 500 over that same period.

What could you buy with an extra 81% in your pocket? That is why having a financial advisor is so important.

But Mr. Ridgeway, why is the average investor returns so low?

Because the average investor tends to panic sell and adrenaline buy. Meaning they sell LOW and buy HIGH, which is the exact opposite of the investment adage of "buy low and sell high". They lose a lot of their potential profit from fear and emotional investing. When the market looks like it is going through a correction they tend to sell below what they purchased it for, taking a loss. And when the market rises again, they tend to get in too late only capturing a small percentage of the growth.

With that said, don't consume yourself with the sensationalism of the news outlets. Their job is to keep you engaged and coming back to see updates. What we are seeing is not out of the ordinary.

During this time, as the scripture states, "Be joyful in hope, patient in affliction, faithful in prayer."

Thank you for reading!

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About the blog:

Many Christians struggle with the seemingly conflicting views about our faith and the pursuit of financial gain. They were taught that poverty was piety and that a lack of money was the only way to truly detach themselves from the love of money. Our blog debunks some of those claims, teaches you that you can be rich and righteous, and at the same time fulfill your obligation to tithe and give to the less fortunate. We are dedicated to helping you become cheerful givers by organizing your personal finances, providing investment tips to help you create wealth, and encouraging you to create a gifting strategy that will make your family and God proud.

Meet the Author:

A.B. Ridgeway, MBA ( is the owner and Christian Financial Advisor with A.B. Ridgeway Wealth Management. With a decade in the finance industry, his goal is to give believers clarity around the most confusing topic in the Bible, money, and tithing. A.B. Ridgeway helps tithing Christians become cheerful givers but unlocking their money-making potential, so they can prosper and be the great stewards of the wealth God has entrusted them with.

This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.



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