How to keep calm when the market is not

Dear Chuck,

Most of my retirement is invested in the stock market. My fear skyrocketed when things went crazy recently. I realize I need to make some changes for my physical and emotional health. How can I keep calm when the market is not?

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Nervous Jitters

Dear Nervous Jitters,

Thank you for your honest email and request for some biblical perspective. Financial markets are certainly volatile right now, but you and I can be at peace in the storms. Let’s look back at what just happened before we look forward.

Volatility spikes

On Monday, August 5th, the Japanese stock market suffered its worst day in 37 years. It fell 12.4%, causing U.S. stocks to drop 3%. The VIX fund (index of volatility) jumped to its highest level since 2020 in the early pandemic days. The very next day, things calmed down, and the fear factor dropped significantly.

A Wall Street Journal article by Jason Zweig on August 9th explained it this way: “The simplest explanation of all: Markets went haywire early this week because markets consist of people, and crazy behavior is contagious.”

A Forbes article by Bill Stone on August 11th said this: “Investors should be prepared for continued volatility due to uncertainty about economic growth and the upcoming election. A recession is not the base case in the short term, but it is appropriate to give notice to the rising risks from slowing job growth and restrictive monetary policy from the Federal Reserve.”

To paraphrase Mark Twain, truth is stranger than fiction because fiction has to make sense.

Markets don’t.

When stocks go on sale

A friend of mine once said that when the markets begin to drop, he sees it as stocks “going on sale” and the best opportunity to buy. Unfortunately, we tend to follow the crowds and sell when everyone is selling and buy when everyone is buying. We should work to set our emotions aside and do the inverse, which is to buy low (when stocks are dropping) and sell high (when prices are rising).

“Financial marketers grab and hold your attention online by playing on your emotions, especially fear and anger … You don’t have to try to make sense of markets that make no sense. And you certainly shouldn’t listen to anyone trying to make you panic. Learning how to talk back to statistics is your first line of defense — and the best way to maintain an even keel when markets go bonkers,” said Jason Zweig.

A Money Watch article by Aimee Picchi on August 9th said this: “The roller-coaster in stocks carries some key lessons for investors and consumers alike. First, expert[s] say, it is important to resist the urge to join the herd of panicked investors rushing for the exit. Second, investors should be preparing for expected rate cuts from the Federal Reserve.”

“Here are five lessons from investment experts about this week’s market swings: don’t try to time the market; have a long-term plan; volatility is normal; watch the economic data; and prepare for Fed interest-rate cuts,” said Aimee Picchi.

My advice:

• Investing involves risk. Do your research, and make sure you are well diversified.
• Look for opportunities during downturns.
• Keep some cash outside the stock market so you can calmly cover your living expenses.
• Investments require risk, and nothing is guaranteed. Accept a negative hit during a downturn and remember this too shall pass. Time in the market is more powerful than trying to time the market.
• Start your day focused on Christ — not the markets.
• Remember the people you love and the things you have and be grateful. 

A foundation that cannot be shaken

In the parable of the house upon the rock in Matthew 7:24–27, we learn that nobody is exempt from storms. In fact, we should expect them. The wind and rain will come for each of us. These give us an opportunity to have our foundation tested. If we have built our house upon the rock (Jesus Christ), we will be able to endure the storms. It does not guarantee we will not lose money, but we cannot lose that which is more precious than silver or gold — our eternal salvation from sin and death through faith in Him. The following verses will help you renew your mind during market storms:

“Keep your life free from love of money, and be content with what you have, for he has said, ‘I will never leave you nor forsake you.’ So we can confidently say, ‘The Lord is my helper; I will not fear; what can man do to me?’”(Hebrews 13:5–6, ESV).

“Set your minds on things that are above, not on things that are on earth”(Colossians 3:2, ESV).

“Rejoice always, pray without ceasing, give thanks in all circumstances; for this is the will of God in Christ Jesus for you” (1 Thessalonians 5:16–18 ESV).

Do you want more tools and tips on financial stewardship? Are you interested in receiving ministry updates from around the world? Sign up to receive the Crown Newsletter emails by using the form on the homepage at Crown.org.