There is an old adage on Wall Street: “The market goes up the escalator and down the elevator.” Stock gains tend to grow in small, steady streams, accumulating over the years and creating security. Stock declines, depressing on the other hand, can be swift, sinking events, which fill us with insecurity. It has definitely be painful for most in the market the last few weeks of the Coronavirus pandemic.

Stocks fell sharply Monday, March the 16th — with the Dow suffering its worst day since the “Black Monday” market crash in 1987 and its third-worst day ever — even after the Federal Reserve embarked on a massive monetary stimulus campaign to curb slower economic growth amid the Coronavirus outbreak. HOWEVER, on March 24th the Dow soared more than 11% in the biggest one-day jump since 1933!

History shows selloffs are inevitable on Wall Street, even the most seasoned traders are sometimes caught off guard, like with the Coronavirus for example. But those seasoned traders will be quick to point out that even a precipitous drop in the market creates opportunities.

The Dow has existed for over 6,200 weeks, and in that time, the index has declined more than 10% in one week just 17 times—less than 0.3% of the time. Statistics show that post-decline, stocks have had a tendency to rise in the four-week and six-month periods afterwards. The average gain in the four weeks after a selloff is 1.1%. The average gain six months later is about 7.5%. But what about now when the COVID-19 recession is already here? Chances of a quick recovery have improved due to actions by the Federal Reserve and the fact that the $2 Trillion economic stimulus package has just passed. Most investment banks are anticipating an economic recovery in Q3 and Q4 of 2020, but others are less hopeful.

When the market is this volatile, people get nervous and rightfully so. Investors saving for a vacation home or European vacation, entrepreneurs looking to start or buy a business, and not just retirees depend on the stock market to cover some of their financial needs. If you are feeling a bit more risk averse these days due to COVID-19, here are some ideas you may want to consider to protect your portfolio:

1. Look at the savings you have stashed away. Review your annual budget for spending at retirement age. Understand that you will need a combination of Social Security and additional dollars from savings, as well as retirement accounts and your portfolio.

2. If during the 10+ year bull market your exposure increased because you didn’t feel you needed that bond cushion again sharp losses, maybe it’s time to formulate a strategy to move your more conservative. If you are now closer to retirement and feel uncomfortable, think about developing a strategy post-recovery to gradually reduce stock exposure to protect against market declines. Right now is not the time to make a drastic change, you might miss the recovery upswing. Remember that with gains in folk’s longevity and improvement in healthcare and technology, your retirement years could stretch up to 30 years or more, so be sure to discuss that with your advisor.

3. You and your spouse might want to consider postponing retirement and working longer, working part-time, or consider downsizing and cutting spending as an offset.

4. Audit your portfolio with the help of a professional. This gives you the opportunity to redefine your goals as necessary, adjust your risk tolerance, and assure that you are properly diversified. Often investors forget what they have or have what is no longer wise. Coronavirus has so drastically changed how business is done, and how folks interact, we do not know yet what will be the new normal. There may even be indications it would be a good time increase contributions.

TFG Financial Advisors, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.