As a professional investor for almost 30 years, I rely on my own experiences to help guide my investment approach.  Every crisis is different, but they often have things in common.

The financial crisis of 2007-2008 was a difficult time for many investors, with stocks and bonds experiencing significant losses. While it’s impossible to predict the future of the stock market, there are several key lessons that investors can take away from our experience during the previous period to help them make better investment decisions today.

  1. Diversification is key

One of the key takeaways from the 2007-2008 financial crisis is the importance of diversification. Many investors who had a heavily concentrated portfolio in just a few stocks or sectors were hit hard during the crisis. In contrast, those who had a well-diversified portfolio that included a mix of stocks, bonds, and other assets were better able to weather the storm. By diversifying your portfolio across a range of asset classes and sectors, you can help reduce your overall risk and potentially minimize losses during periods of market volatility.

  1. Risk management is essential

Another key lesson from the 2007-2008 crisis is the importance of risk management. While it’s tempting to focus solely on potential returns when making investment decisions, it’s also important to consider the potential risks involved. Liquidity is essential. Regardless of your net worth, if you have a comfortable amount of money sitting in cash (money market, savings, etc.) you can ride out most tough markets.  We recommend 6-12 months expenses for a retiree and 3-6 months expenses for a two-income household.  By taking a more conservative approach to investing and carefully managing your risk exposure, you can help protect your portfolio from significant losses during market downturns.

  1. Stay the course

The long-term outlook only matters if you can make it to the long term.  During times of market volatility, it’s easy to get caught up in fear and uncertainty. However, one of the most important things investors can do is to stay the course and avoid making rash decisions based on emotion. Investors who sold off their stocks or other investments during the financial crisis missed out on the eventual recovery of the market. By maintaining a long-term perspective and sticking to your investment strategy, you can potentially ride out periods of market volatility and position yourself for future growth.

  1. Remember life > money and more money ≠ better life

Take care of yourself. Sleep, exercise and healthy diet are important to maintaining a constructive attitude. We owe it to ourselves, our families and our clients to stay healthy.  Turn off the financial new (all news if you will) and focus your time and effort on those you love, doing things you enjoy and focusing on activities where you can make a difference.  Time spent reading and listening to financial news & predictions, economic forecasts, political events is wasted time.  You cannot change any of these things… so stop it.

  • Seek professional guidance

Finally, one of the most important lessons from the 2007-2008 crisis is the value of seeking professional guidance. Whether you work with a financial planner, investment advisor, or other professional, having a trusted expert on your side can help you make more informed investment decisions and navigate periods of market volatility more successfully. By working with a professional who understands your individual goals, risk tolerance, and investment needs, you can potentially improve your chances of achieving long-term financial success.

In conclusion, it is difficult to predict when the current crisis will end, but experience has taught me that it will and that we will get through this. Time and time again, markets have demonstrated a remarkable ability to endure and recover from crisis and thrive.

By taking these key lessons to heart and incorporating them into your investment strategy, you can potentially position yourself for long-term success in today’s ever-changing market. If you have any questions or concerns about the markets, your accounts or about investing with us please reach out and Schedule a Call with one of the advisors in our office.


Dave Conley, CFP