Dear Dr. Per Cap: Last summer I opted into my tribe’s 401-K plan.  Everything was going great until February when the stock market started freaking out.  One day the market is up and the next it feels like stocks are going to come crashing down.  My account balance is down for the year and I’m worried it’s going to keep dropping.  What should I do?

Signed, Stressed in Lapwai, ID

Dear, Stressed

First off step back, take a deep breath, and relax.   I know it’s hard to watch your money rise and fall like a Tilt-A-Whirl at the state fair but remember unless you suddenly decide to sell or liquidate the investments in your 401-K you’re only looking at unrealized paper losses.  You didn’t mention your age but I’m guessing you’re still a few years away from retirement.  Meaning you’re a long term investor who won’t need to start withdrawals any time soon – more reason to relax.

The volatile market we’re in has a lot of investors worried right now and everyone has an opinion about what’s going on – rising interest rates, fears of a global trade war,  overvalued stocks coming back to earth – take your pick.  As of early April 2018 all major U.S. stock indexes are down for the year with technology stocks taking an especially hard beating.  That’s a wake up call considering  high flying tech stocks like Facebook, Apple, and Google parent company Alphabet, driving forces in last year’s strong overall market gains, have collectively lost over $300 billion of market value since mid-March.  How do they protect that data!

Another concern is that bonds, often a shelter in times of stock market turbulence, aren’t performing any better than stocks these days.  So where should an investor put her money?

I’ll respectfully dodge that question by recommending that an investor first come up with a view of where you think the bull market is heading.  A bull market can be described as a prolonged period in which stocks or other investments increase in value.  And the current bull market in stocks just celebrated its tenth birthday having officially begun in March of 2009.  To put things in perspective they were still putting cassette players in new cars when this thing started, making it the second longest bull market since the end of World War II.

So the real question is how much longer can it last?  If you think this year’s volatility is just a speed bump on the road to higher stock market gains you’ll probably want to stay the course, maybe even increase your monthly retirement contributions to buy on the dips.

On the other hand if you think the bull market is riding into the sunset like a cowboy in a George Strait ballad it might be time to re-balance.  So if you’re less than ten years from retirement consider shifting your 401 K holdings away from stocks and into U.S. Treasuries, high quality low risk securities issued by the federal government, or a cash equivalent money market fund.  Bear in mind you won’t earn much return with a money market but you also won’t lose any principal – your original investment.

If you’re not sure which way the market is heading understand that most folks currently fall into the second camp.  In fact according to the American Association of Individual Investors, only 31% of individuals expect stocks to go up over the next six months.  Yikes!  And remember what a wise person once said:  “Life is like a roller coaster.  It has its ups and downs.  But it’s your choice to scream or enjoy the ride.”