Investing During Market Volatility: Tips for Smart Decisions

Football is back, which means Summer is coming to a close, days will get shorter, and sweaters will soon be in play.

This year, there was no pre-season, so professional football started in September, which coincidentally, is a perennial month for stock market volatility.¹

Football follows Major League Baseball, the National Basketball Association, and the National Hockey League, in which each organization started seasons (some abbreviated) in the past few months. Some colleges are playing fall sports, while others have postponed a part of their seasons.

September’s Market Moves

This year, September is helping its reputation as a volatile month. After closing at a record high on September 2, the Standard & Poor’s 500 stock index fell sharply over the next three sessions. Concerns about COVID-19, Congress taking its time with further economic stimulus, and the upcoming elections seemed to unnerve investors.^1,2,3

New Protocols for the NFL

Most pro football stadiums are open to players and staff, but fans can expect to watch the games at home for much of the season. While games won’t be held inside a “bubble,” as with the NBA and NHL, NFL teams have changed travel and lodging protocols to distance or isolate players as much as possible, up to hiring two planes for each traveling team.⁴

Staying Focused on Your Goals

The point is this: stay aware of current events and make informed decisions. While your financial professional may not have tips for your fantasy football team, they can help you remain focused on investment goals despite short-term market volatility.

^{1. CNBC.com, August 31, 2020}

^{2. The Wall Street Journal, September 3, 2020}

^{3. The Wall Street Journal, September 8, 2020}

^{4. Philadelphia Inquirer, September 9, 2020}

Important Information

Investing involves risks. Your investment decisions should be based on your goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Market Index:

The S&P 500 Composite Index is an unmanaged group of securities representing the broader U.S. stock market. Past performance does not guarantee future results, and individuals cannot invest directly in an index.

Disclaimer:

We develop this content from sources we believe provide accurate information. This material is not intended as tax or legal advice. Please consult qualified legal or tax professionals for guidance specific to your situation.

FMG Suite, LLC produced this material to provide information on topics of interest. FMG Suite is not affiliated with the named representative, broker-dealer, or any state- or SEC-registered investment advisory firm.

Finally, the opinions expressed in this material are for general information only and should not be considered a solicitation to buy or sell any security.

FAQ:

1. Why is the stock market often volatile in September?

September has historically been a volatile month for the stock market due to factors like end-of-quarter portfolio adjustments, investor sentiment, and economic or political uncertainties. In 2020, COVID-19 and election concerns contributed to this trend.

2. How does the NFL season affect financial markets?

While the NFL season itself doesn’t directly move markets, major sports seasons can influence consumer spending, media engagement, and market sentiment. For example, higher viewership or economic activity during football season can indirectly reflect broader consumer confidence.

3. What caused the S&P 500 to drop in early September 2020?

In September 2020, the S&P 500 fell after reaching record highs due to concerns over COVID-19, delayed government stimulus, and uncertainty ahead of the 2020 elections.

4. How can investors stay focused during market volatility?

Investors should prioritize long-term goals, maintain diversification, and avoid reacting to short-term headlines. Consulting a financial professional can provide guidance and reassurance during uncertain times.

5. What COVID-19 protocols did the NFL implement in 2020?

NFL teams adjusted travel and lodging, limited fan attendance, and created measures to isolate players when necessary. Some teams even hired additional planes to reduce contact, ensuring games could proceed safely.

6. Does sports season timing affect stock market trends?

Yes, indirectly. Certain months with major sports events, like September (NFL kickoff) or March (March Madness), can coincide with market volatility due to timing of investor behavior and economic reporting cycles.

7. How can short-term market fluctuations affect long-term investments?

Short-term market volatility may cause temporary portfolio swings but generally doesn’t impact long-term investment growth if goals, time horizon, and risk tolerance are maintained. Patience and a disciplined strategy are key.

8. What is a safe strategy during September market volatility?

Focus on long-term investment goals
Avoid impulsive decisions based on headlines
Keep a diversified portfolio
Consult a financial professional for guidance

9. How should investors interpret market behavior during major events like COVID-19 or elections?

Use economic indicators, news, and historical trends as context, but avoid overreacting to uncertainty. Markets often anticipate future conditions, so understanding lead, lag, and coincident indicators can help.