Telling investors not to panic and stay invested in the market is an easy thing to say, yet, it’s a significantly more difficult thing for investors to do – especially if they believe some media reports that the market is “crashing.”

Yet, staying invested is exactly what investment professionals like Richard Evans, principal of Richard L. Evans Investment Management recommends. In fact, he emphatically stresses to the firm’s clients that the market isn’t crashing as much as it is going through a normal cycle.

“The biggest problem (that) investors – and most advisors make – is selling out when markets decline. They panic. I want to stay invested and keep buying when the markets are declining, so that we have more shares when the market recovers,” Evans explained.

Recovery statistics after the 2008 Great Recession – which saw a mass exodus of investors from the market – show, nearly a decade later, the rewards for staying in the market, even as the natural human “fight or flight” response urged people to exit during that time.

For example, an average investor with $10,000 in the American S&P 500 in January 2007 would see that amount drop to $5,800 by March 2009 when the bulk of the exit occurred. Leaving that $10,000 invested would have shown the average investor growth to $17,000 by the end of 2014, according to economic calculators factoring market responses during that time period. In fact, investing in a downturn often transforms into a significant increase when the market is up. If the same investor had added $10,000 at the end of March 2009 to the original $10,000 from January 2007, the value of his or her investment would have increased to $46,000.

“My clients want their money to grow safely over time,” Evans said. “We are not so much numbers as we are risk management. We do not advertise any performance numbers, as I do not want to attract any clients who want performance. When the markets are advancing, fine, but our emphasis is risk management on the downside. My clients want to sleep at night. They want to see their portfolios advance over a complete market cycle, which they do.”

Evans views ETFs and index funds as the biggest problem in today’s financial world. He labels them as “fads” and fool’s gold sold by stockbrokers whose first priority is not of a fiduciary nature. He sees them as high risk in portfolios; risk that does not aid an investor in reaching financial security goals, as they will only precipitate short-term selling.

“I believe in risk management above all, and place risk management above performance goals,” Evans said. “I construct portfolios so investors do not panic.”
Richard L. Evans Investment Management, LLC is an independent, registered investment advisory firm based in Flossmoor, Illinois.

Learn more about Richard L. Evans Investment Management, LLC online at www.rlevansinvestmentmanagement.com