What is Smart Money Doing?

 

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Why Panic is Your Worst Enemy: What Smart Money is Doing During a Crisis

The reality is, market crashes are inevitable. They happen regularly and are often triggered by crises – political conflicts, economic downturns, health scares, you name it. But the real question is: What are the smart investors doing when everyone else is panicking?

1. The Contrarian Mindset: Why Smart Money Buys When Others Are Selling

When the market drops, panic ensues. Retail investors scramble to sell off their stocks to “cut their losses.” But the smartest investors view downturns as an opportunity. Historically, market corrections are followed by significant rebounds. Look at the table above — even the worst crashes have recovered impressively over time.

If house prices drop, everyone rushes to buy. But when stocks fall, people panic and sell. This irrational behaviour is what separates the wealthy from the average. They see discounts while others see danger.

2. The Danger of DIY Investing and Lack of Diversification

During this recent downturn, DIY investors who only piled their money into tech stocks or exclusively into the S&P 500 are feeling the heat. Why? Because they lacked diversification.

A well-structured portfolio isn’t just about putting your money in the hottest sector. It’s about balancing your assets across equities, bonds, fixed-income investments, and even real estate. This is where having a financial advisor comes in.

3. Risk Management: Why an Advisor is More Important Than You Think

Good financial advisors are not just there to help you pick investments. They are your emotional guardrails. When you feel the urge to sell off everything in a panic, they are there to remind you of your long-term plan.

They help you make rational decisions and educate you about risk management. Without an advisor, it’s easy to make knee-jerk reactions that cost you dearly. They also help you diversify, provide strategies for hedging risk, and ensure your investment goals are aligned with your risk tolerance.

4. Hedging Risk with Fixed-Income Investments

One of the most overlooked aspects of a well-rounded portfolio is fixed-income investments. During volatile times, having a portion of your wealth secured in assets that provide steady returns can help smooth out the bumps. This could be bonds, structured notes, or other low-risk, steady-return vehicles.

Smart money knows how to hedge risk. They don’t panic and sell when markets dip; instead, they rebalance their portfolio, adding more to quality investments while maintaining a solid foundation in safer assets.

5. This Is Your Life — Don’t Gamble With It

Investing isn’t a game. The goal is to build a future where you can afford the lifestyle you want, whether that’s retirement at 50, sending your kids to college, or buying your dream home. Would you gamble your health by avoiding a doctor? Then why gamble your future by avoiding expert advice?

Advisors are as important as doctors. They are there to keep you on track, to help you avoid costly mistakes, and to ensure your financial health is maintained throughout your lifetime.

6. Take Action: Stop Gambling, Start Planning

The worst thing you can do during a downturn is to panic. The second worst thing you can do is nothing. You don’t have to be a financial expert to build wealth. But you do need to take action.

The best investors don’t react emotionally. They have a plan and they stick to it. They work with experts who help them maximize gains and minimize losses.

Are you ready to take control of your financial future? Reach out and let’s build a plan that keeps you moving forward, no matter what the market does.

Book a meeting:

https://outlook.office365.com/book/SkyboundWealthManagement4@skyboundwealth.com/s/GxL75GQxr0KaVOmhTMCyZg2

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