In times of uncertainty, whether it’s related to our careers or investments, we often seek guidance to navigate through confusion. Even seasoned investors can find themselves at a crossroads during periods of extreme market volatility, struggling to make informed decisions. This is where a skilled investment advisor becomes invaluable.
Why an Investment Advisor is Crucial During Market Volatility
An investment advisor plays a pivotal role in guiding investors through turbulent markets, offering personalized strategies, insights, and emotional support. Here’s how they can help you:
Personalized Investment Strategies
Market volatility often triggers emotional responses like panic selling or impulsive buying. A qualified investment advisor helps you stay disciplined, encouraging you to adhere to your long-term plan rather than reacting to short-term market fluctuations.
Investment advisors tailor investment strategies to your specific financial goals, risk tolerance, and time horizon. This ensures that your portfolio remains aligned with your long-term objectives, even during unpredictable market periods.
Regular Portfolio Review and Rebalancing
Over time, market movements can shift your portfolio’s original asset allocation, potentially exposing you to more risk than you’re comfortable with. For example, if your stocks perform well, their proportion in your portfolio might grow, increasing your overall risk.
Investment advisors regularly review and rebalance your portfolio, ensuring it stays aligned with your risk tolerance and investment goals. This proactive approach is especially crucial during volatile market conditions when maintaining a balanced portfolio can prevent unnecessary risks.
Real-World Example: Savart’s Response to the 2020 Market Crash
Let’s take a look at an example that underscores the importance of having a SEBI-registered investment advisor like Savart during uncertain times.
The year 2020 was a global turning point, with the COVID-19 pandemic causing unprecedented economic disruptions and stock market crashes worldwide. During Q4 FY 2019–20, major global markets, including India’s Nifty and Sensex, plummeted by 30–35%. The USA’s S&P 500 dropped by 48–52%, and Canada’s TSX index saw a staggering decline of 55–58%. China’s HSI index wasn’t spared either, experiencing a 26–30% drop.
In such a scenario, when your investments are at risk, what would you do? As an investor, seeing your profits shrink and your capital erode can be distressing. Here’s what Savart did to protect its clients.
From the first signs of COVID-19 in December and the Shanghai stock market crash in January, Savart’s APART system rigorously analyzed global markets for any potential impact on Indian markets. Sifting through millions of indicators, APART recommended an immediate withdrawal of 50–65% of investments from the market.
Despite the surprise this caused within the team, Savart adhered to its core belief: trust the system’s intelligence. While it was impossible to predict the pandemic, the system indicated a looming crisis. The action was clear: Exit the market.
Savart acted decisively by halting new investments, exiting existing ones, and moving to safer debt funds. Clients were promptly notified on January 2nd, 2020, urging them to shift to liquid assets. This early intervention helped Savart’s clients avoid the worst of the market crash, with portfolios experiencing an average loss of just 12.6%—a loss on profit, not the principal amount.
This example highlights why having an investment advisor is crucial. Savart’s strategic foresight not only safeguarded investments but also ensured that portfolios remained resilient during the market downturn.
Continuous Monitoring and Market Insights
The stock market is dynamic, with liquidity and reactions constantly changing based on announcements, policy changes, government initiatives, and corporate results. Investment advisors continuously monitor these factors, ensuring your investments are always in sync with market conditions.
By staying on top of both qualitative and quantitative data, investment advisors can recommend stocks with strong fundamentals, even in volatile markets. Their comprehensive analysis helps you make informed decisions, reducing the risk of losses during uncertain times.
Emotional Support and Behavioral Coaching
Investment advisors don’t just manage your portfolio; they also provide emotional support during turbulent times. Market volatility can cause anxiety and fear, leading to irrational decisions. A SEBI-registered investment advisor acts as a behavioral coach, helping you manage your emotions and make rational decisions.
For instance, when markets plummet, your instinct might be to sell off your investments to avoid further losses. However, this decision could lock in your losses and prevent you from benefiting when the market recovers. Your advisor will remind you of your long-term goals and encourage you to stay the course, preventing you from making hasty decisions that could harm your financial future
Conclusion: Navigating Volatility with the Right Investment Advisor
An investment advisor offers a comprehensive approach to navigating market volatility. A SEBI-registered investment advisor provides the expertise, discipline, and strategic guidance needed to navigate these challenging times. They don’t just react to market changes; they anticipate them and adjust your portfolio accordingly.
Moreover, SEBI registration ensures that your advisor adheres to strict regulatory standards, providing you with an added layer of protection. SEBI-registered advisors undergo rigorous training and certification, ensuring that they possess the knowledge and skills needed to manage your investments effectively.
Choosing the right investment advisor, like Savart—a SEBI-registered investment advisor—ensures that your investments are managed with expertise and care, safeguarding your financial future against unforeseen market events.
Disclaimer: The purpose of this content is to educate, not advise or recommend any particular security. Investments are subject to market risks. Please conduct thorough due diligence or seek professional guidance before making any investment.