Day traders and hedge funds bid up dubious investments to astronomical levels. Online brokerage firms turn investing into a high-stakes, multiplayer game rather than a sensible way to grow your nest egg. 

All this recent turmoil has tempted some investors to join the hunt for big returns. Others feel the markets are rigged and want to sell everything, wondering if they can ever trust the markets again. Many feel overwhelmed and don’t want to even look at their 401(k) statements.

Bottom Line Personal spoke to a panel of five top financial advisers and experts from around the US. Their somewhat comforting perspectives… 

Short-term trading is particularly dangerous nowand will continue to be plagued by transitory frenzies that could affect the broad markets and especially niche areas such as heavily shorted stocks, options, cryptocurrencies (such as Bitcoin) and small-tech stocks. If you need your money back in fewer than three years, you should have little or no exposure to these assets.  

For longer-term investors willing to ride out the current volatility, thefinancial markets still are structurally safe. The pandemic created a highly unusual and temporary environment for financial markets—millions of amateur investors, trapped at home and bored, turned to the stock market for thrills. Their interest in, and influence on, the market are likely to dissipate in coming years.

Tougher regulations for Wall Street that will rein in day traders and help control volatility are likely after years of deregulation. These may include new taxes on stock transactions, penalties for brokerages such as Robinhood that provoke their customers into heavy and ­aggressive trading and also cracking down on short-selling with hedge funds. 

Here are the panel’s ideas on how long-term investors can tweak their portfolios to feel safer now…take ­smarter risks…and avoid mistakes that can sabotage retirement goals… 

If you’re panicked and feel like selling your stock portfolio and getting out…

Ensure that you never suffer a major loss. Professional investors are willing to suffer moderate losses if they make a mistake or the market irrationally turns against them, but never a catastrophic one. They exit losing positions quickly rather than hang on to a losing stock or exchange-traded fund and hope it recovers. What to do: Set up stop-loss orders on investments you expect to be volatile. It’s a free service offered by most brokerage firms that triggers a sale when an investment’s price falls to a predetermined threshold. Example: You might set up a stop-loss order for 10% below the current price of a large-company stock you own but 20% below for volatile small-company stocks. As your investment appreciates, consider placing a “trailing stop-loss order,” which constantly adjusts to remain at the same percentage level below the fluctuating market price. 

Pam Krueger is CEO of Wealthramp.com, an SEC-registered referral service that matches consumers with financial advisers, Osterville, Massachusetts. She also is executive producer of the PBS TV show MoneyTrack.

Micro-rebalance your portfolio. If you’ve established a sensible long-term investment plan and your life circumstances haven’t changed, rethinking your overall asset allocation isn’t necessary and could be detrimental. Instead: Regain some control and relative safety in volatile markets by rebalancing more frequently, either monthly or whenever your portfolio strays by more than five percentage points above or below your long-term allocation levels. Don’t just rebalance between stocks and bonds. Restore your desired level of exposure between pricey, fast-growing stocks and slower-growing undervalued ones. ­Important: Micro-rebalancing works best in tax-deferred portfolios where you don’t have to worry about the tax consequence of capital gains and losses. 

Scott B. Tiras, CPA, CFP, is president of Tiras Wealth Management, a financial advisory firm with $2.2 billion in assets under management, Houston. AmeripriseAdvisors.com/scott.b.tiras

If you feel paralyzed…

Remember why you are investing. When you’re nervous about making investment decisions, go back to your ­financial priorities and how you can earn the return that you need to maintain the standard of living you want without the risk for substantial loss. When you do that, your next move becomes clear. Example: One client came into a half-a-million-dollar windfall from the sale of his primary residence after a divorce. He couldn’t decide if he should invest aggressively or stay in cash and wait for a pullback. His number-one priority was making sure he had adequate cash reserves and enough funds for a down payment on another property. To sleep better at night, I advised him to keep $250,000 of the windfall in a stable-value fund, a portfolio of bonds that are insured to protect against a decline in yield or a loss of capital. He didn’t need the remaining $250,000 for a long time, so it was earmarked for long-term retirement planning with a diversified portfolio of both value and growth stocks.

Marguerita Cheng, CFP, is CEO of the investment advisory Blue Ocean Global Wealth, Gaithersburg, Maryland. BlueOceanGlobalWealth.com

Take small bites. I know investors who got out at the bottom of the bear market in 2020 and then couldn’t decide when to get back in, missing the entire rally the rest of the year. When you reach this level of paralysis, making small, automatic and regular moves usually is the right solution to get unstuck. Add or remove a set amount of stock each month from your portfolio for the next six months to a year. After that period, you can reevaluate.  

Frank F. Murtha, PhD, is a managing partner at MarketPsych, a behavioral-finance consulting firm, New York City. He is coauthor of MarketPsych: How to Manage Fear and Build Your Investor Identity. MarketPsych.com

If you are afraid of missing out and are itching to make speculative bets…

Start a “too-hard” pile. Investing means taking the time and learning the skills to understand why a company will keep growing and, hence, become more valuable. If I’m not 100% confident that I understand an investment, I avoid it no matter how much enthusiasm and hype it’s receiving. I pride myself on being too stupid to understand many “hot” opportunities—and I pride myself in saying “no” to investing in them. Missing losses is my primary rule. Recent hot ­investments in my too-hard pile: Cannabis growers…biotechs with miracle cures…special purpose acquisition companies (SPACs)…gold miners…energy producers…and Bitcoin. If my friends are striking it rich with investments that I don’t understand, I wish them well. I’m not jealous. I stick to what I understand.

Harry Newtonis an investor, ­entrepreneur, and editor of the blog ­InSearchOfThePerfectInvestment.com

Quarantine your high-risk investments. Many investors set aside a small portion of their assets as play money. But the intense rush you get from risky trading can easily infect and endanger the rest of your portfolio. If a high-risk gamble fails, you’re tempted to replenish your play money. If it soars, you’re inclined to double down on your own brilliance. What to do: Set up and ­reinforce strict barriers with play money. ­Establish an entirely separate account for it (ideally at a separate brokerage firm). Once you fund the account, you cannot add additional money. You can further strengthen the quarantine by making it less convenient to access, check on and trade your play money. Don’t keep the brokerage firm app on your smartphone, and set up two-step security verification when you sign in to it. 

Frank Murtha.  

Find your Charlie Munger. ­Munger is the 97-year-old vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett. Buffett affectionately calls Munger “the abominable no-man” because he’s often skeptical about potential investments. You need a similar sounding board if you’re considering a speculative investment. It could be a friend, spouse or financial adviser—someone to provide objectivity and force you to rationalize/defend your decisions. If your idea seems like a good one after speaking with your sounding board, it’s probably worth trying.