3 steps for dealing with market volatility

By Beth Braverman

The last few weeks have served as a stark reminder that stocks can be volatile — sometimes extremely so.

The S&P 500 fell by more than 5% in January, its worst performance since the pandemic began, and markets remained choppy through the first two weeks of February. Experts expect the volatility to continue going forward, amid concerns about inflation and rising interest rates, geopolitical uncertainty, and the ongoing pandemic.

"There are a lot of headwinds," said Craig Ferrantino, founder of Craig James Financial Services in Melville, New York. "Some of it is temporary, but some of it might take a long while to clear out. There is a lot of economic uncertainty."

Market volatility can be a good thing for long-term investors who dollar-cost average -- meaning they contribute regularly to their investment accounts over time -- since it allows them to hedge their risk by buying stocks at both the highs and lows, smoothing out the returns.

But recent market performance has some investors anxious about a potential correction, during which the market falls by 10% or more from recent highs.

"For the average retirement investor who doesn't have an adviser reminding them during the upcycles that there is going to be a correction, it can be a scary time," said Deborah Meyer, a certified financial planner and CEO of WorthyNest. "That's especially true for you millennials who haven't been through a market crash before."

If you're worried about your investments, take a deep breath and then follow these steps:

1. Take money you need in the short-term out of the market

Experts advise against keeping any money you will need in the next five years (or sooner) out of the stock market entirely and moving it into safer investments like a high-yield savings account or a money-market fund. That includes your emergency fund, as well as cash you've set aside for near-term goals like a down payment on a home, or renovation or wedding.

Interest rates are rising. Here's what to do if you're investing in bonds

If you're retired or nearing retirement and you plan to draw on your portfolio for everyday costs, consider moving up to two years' worth of expenses out of the stock market.

"So long as you know your liquidity needs are met, you can let your portfolio do its thing, and you will weather through any potential recession," said Nancy Hetrick, founder and CEO of Smarter Financial Solutions.

2. Stick to your plan for longer-term investments

For longer-term investments, remind yourself what you're saving for. If you're putting money aside for a retirement that's decades away, for example, or college tuition for your toddler, you have plenty of time for your investments to recover from any dips or even a correction.

The reason most advisers recommend that long-term investors keep the bulk of their money in a diversified portfolio with a heavy allocation to stocks is that volatility and short-term risk allows for higher returns over time. But you should determine what allocation is best for you based on your time horizon and personal risk tolerance.

Quit your job? Here's what to do with your 401(k)

"Even the biggest firms can't time the market in the short term," said Anthony Mezzasalma, a certified financial planner with Mezzasalma Advisors. "The way to get around that is to have a plan and make sure that the money we're taking risks with is invested for the long-term."

Having a pre-determined asset allocation (and determining which circumstances would justify you making changes to it) allows you to avoid making emotional decisions about your investments when volatility hits. The longer you can remain invested in the market, the more time you'll have for your investment gains to compound, negating the impact of day-to-day market movements.

3. Make sure you have realistic expectations

Even with the short bear market that hit at the start of the pandemic, investors have enjoyed record performance in recent years. The S&P 500 is up nearly 60% over the past three years.

It's easy to forget that historically speaking, annual returns hover closer to 10%, and that bear markets (pullbacks of 20% or more) hit, on average, once every two to three years. That means that expecting your investments to continue to perform as they have over the past three years is not realistic.

"Even if you know that volatility is normal, it can be a very visceral experience when we see our wealth vanish," said Donald Calcagni, chief investment officer with Mercer Advisors. "But it comes back to having a plan, and sticking to it."

The Future of Team Leadership Is Multimodal

 

COVID-19 is accelerating a shift to hybrid work models, which requires a fundamental change in the skills team leaders need to succeed.

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The Future of Team Leadership Is Multimodal

Robert Hooijberg and Michael Watkins

COVID-19 is accelerating a shift to hybrid work models, which requires a fundamental change in the skills team leaders need to succeed.

MIT SLOAN MANAGEMENT REVIEW

The pandemic has accelerated a pre-COVID-19 shift in how individuals and teams do intellectual work. Companies have learned that routine tasks involving transactions and coordination can be done purely virtually, while work requiring true team collaboration (collective learning, innovation, building a shared culture) is still best done face to face. We envision that the post-pandemic future of teamwork will be a purposeful hybrid combination of virtual coordination and in-person collaboration.

Effective leadership in this new hybrid world requires different skills that go beyond traditional team leadership. Specifically, organizations will need leaders who can operate well across two distinct modes. For much of the time, they will operate in virtual coordination mode. This means establishing goals, monitoring progress, driving information sharing, and sustaining connections among colleagues working remotely. When their teams periodically come

together to engage in true collaboration, leaders will need to operate in face-to-face collaboration mode, fostering deep learning, innovation, acculturation, and dedication.

The nature and mix of team tasks will dictate the modes in which those teams operate. Tasks that involve working interdependently but without much integration — reporting, performing administrative tasks, making simple decisions, sharing information, drafting documents, and performing financial analyses — will mostly be done virtually. Likewise, our research and experience have shown that most one-on-one interactions, including some coaching, between leaders and their reports can be accomplished effectively through virtual means.

However, essential tasks that require team members to integrate their knowledge, create safe spaces for dialogue on difficult issues, and form emotional connections cannot be done productively while working virtually. For example, team efforts to achieve breakthrough innovation, solve complex problems, build culture, and manage conflicts are still performed much more effectively in person, given the current limitations of technology. (See “The Future of Work Survey” for more about the research.)

These complex tasks are challenging to perform virtually because they involve four dimensions of impact that are better served through in-person interactions:

• Collaboration, which is not just about content collaboration and coordination but also building a shared

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understanding, relationships, and trust.

• Innovation, which requires brainstorming, knowledge integration, and shared learning, for which trust and time together in a nonstressful environment are essential.

• Acculturation, which requires extended periods of face- to-face connection to develop mutual understanding, reinforce norms, and build a shared identity.

• Dedication, which comes from having a shared sense of purpose, feeling like part of a community, and having opportunities to grow professionally.

  The implications for the future of leadership are profound. The multimodal workplace is changing the types of skills required to lead teams virtually and in person successfully. In particular, there are four roles that leaders will need to play as they adapt to managing a hybrid workforce. Their relative importance will depend on the extent of team coordination and integration.

  Conductor. A mostly virtual team leadership role, the Conductor ensures that plans, decisions, information, and accomplishments are shared to coordinate and motivate team members. The role is akin to that of an orchestra director, who ensures that musicians play well individually and in harmony. In the Conductor role, leaders manage goal setting, simple planning, decision-making, work coordination, and progress tracking while sustaining connection, trust, and engagement with team members.

  For success in this role, leaders must strike the right balance between demonstrating genuine care and engagement and micromanaging, which saps morale. The pandemic has highlighted how exhausting endless video calls are, requiring Conductors to be highly efficient and engaging in their orchestration of virtual team time.

  Catalyst. When meeting in person, the Catalyst stimulates collaboration, spurs creativity and innovation, creates a shared culture, and fosters dedication. To accomplish this, these leaders must build trust and create an environment of psychological safety. Doing so allows them to facilitate in-depth dialogue and encourage creative conflict — but

not harmful personality clashes — when sharing ideas. We use the term catalyst to indicate that the focus here is on enabling others to shine and facilitating collaboration processes.

Coach. When working one-on-one with their reports virtually or in person, leaders need to play the role of Coach. This means focusing on helping their people achieve peak performance while building trust and focusing on their well- being and professional development. Playing this role effectively requires a high degree of emotional intelligence and the ability to establish a balance between showing empathy and encouraging people to push beyond their boundaries. When done well, coaching can enhance connections, as well as engagement and productivity.

Champion. Whereas the Conductor, Catalyst, and Coach roles involve managing individuals and teams who report directly to a particular leader, the Champion role requires leaders to advocate externally for their teams. It requires leaders to secure team resources, tap into essential information sources, communicate accomplishments, and build trust with peers and other key stakeholders both in person and virtually. The Champion role, therefore, requires skills in negotiating, influencing without formal authority, and building alliances.

A central theme linking all four roles is the need for leaders to build and sustain connections and trust. Many companies did not embrace remote work before the pandemic because they lacked trust in their employees to be productive at home. At the same time, there were concerns about managers’ ability to monitor performance. However, building and sustaining trust is essential to multimodal leadership, especially when the team is operating virtually.

Fostering trust shows up in each of the 4-C roles in distinct ways. In the Conductor role, leaders encourage trust by sharing achievements so that everyone knows their colleagues are contributing to the team’s success. In the virtual world, we are often suspicious that peers are slacking off, and emotions can run high in a crisis. Another way to strengthen trust is to personally check in with your team members to see how they are coping, how their work is progressing, and what help they might need. This is one of the central themes of emotional intelligence, and it can also

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strengthen team spirit. Checking in at the individual level is also an essential element of the Coach role.

These trust-building methods work well online, but when teams come together in person, leaders will want to channel the Catalyst role, where trust plays an essential role in spurring innovation and creativity. After all, people need to feel safe to experiment and share moonshot ideas without fear of being judged. Therefore, the Catalyst role requires leaders to create healthy, safe bonds with teams by playing more of an enabling rather than a directive role. This requires managers to balance confidence with an appropriate degree of humility and social awareness.

For example, when we work with teams of leaders at IMD, we often have executives share some of the highs and lows in their lives, creating connection and trust through the experience of shared vulnerability. It brings people closer together and opens up the possibility for greater collaboration. But we have found that sharing personal issues is not something all participants would feel comfortable doing on a Zoom call. Creating a trusting environment is critical to the roles of both Coach and Catalyst, along with emotional intelligence that can be honed through working on one’s self-awareness, self-care, social awareness, and relationship management.

The higher up in an organization you rise, the more critical the Champion role becomes. The matrix organizational structures of many companies require leaders to rely on organizational influence rather than authority to obtain the necessary resources for teams and contribute in a

meaningful way to the company’s overall goals. In the Champion role, we build trust with our peers by showing interest in their aspirations and by putting organizational goals ahead of our own team’s objectives.

Leaders need to recognize that they might need help themselves to provide support to their teams as they play these four roles. Most leaders are already proficient in the Conductor role because it requires many traditional management and leadership skills, such as monitoring, delegating, decision-making, and motivating. In contrast, the Catalyst and Coach roles need different sets of skills and attitudes. Here we think especially of facilitation skills, emotional intelligence, and humility.

To be successful in this new era, team leaders must learn to adapt the four roles of multimodal leadership: Conductor, Catalyst, Coach, and Champion. These four roles provide a framework for leadership effectiveness in the post-pandemic world of work.

About The Authors

Robert Hooijberg is a professor of organizational behavior at IMD Business School. Michael Watkins is a professor of leadership and organizational change at IMD, cofounder of leadership consultancy Genesis, and author of The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter (Harvard Business Review Press, 2013).

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MIT SLOAN MANAGEMENT REVIEW

The Future of Work Survey

We surveyed 40 executives globally in November 2020 and found that three-quarters of them were working virtually for at least 60% of the time and two-thirds more than 80% of the time. They expected to continue working at least 50% virtually beyond the pandemic, suggesting that COVID-19 has driven a permanent shift in how we work.

When asked what work can be done effectively virtually, 45% of respondents mentioned transactional team activities such as reporting, giving updates, performing administrative tasks, and making simple decisions; 25% pointed to participating in one-to- one meetings and having similar types of interactions, such as interviews and one-on-one coaching.

In a related question about which work cannot be done effectively by virtual means, 40% mentioned integrative work in teams, including innovating, making strategic decisions, or solving complex problems. Additionally, 15% pointed to building relationships and networking, while 13% identified negotiating and having difficult conversations.

Multimodal Leadership Roles

The amount of time team leaders work with their teams in the virtual Conductor role as opposed to in-person Catalyst will depend on the extent to which the team’s work requires the integration of members’ knowledge and perspectives. The greater the interdependence, the more time the leader will have to act as Catalyst. The extent to which leaders will do coaching in person likely will depend on proximity.

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The Most Marketable NBA All-Stars: LeBron, Durant And Curry Lead A $234 Million Endorsement Roster

 

Brett Knight

Forbes Staff

SportsMoney

I cover the business of sports

LeBron James of the Los Angeles Lakers during a December 31 game.

 KATELYN MULCAHY/GETTY IMAGES

With the NBA All-Star Game rosters set after Thursday’s draft, it’s up for debate which squad has more game on the floor. Off the floor, though, it’s no contest.

LeBron James selected Giannis Antetokounmpo with the first pick of the night and padded out his team’s roster with three other players from Forbes’ list of the highest-paid NBA players this season: Stephen Curry, Jimmy Butler and James Harden, who hours earlier had been traded away from opposing captain Kevin Durant’s Brooklyn Nets. Those five players’ combined earnings off the court: an estimated $187 million this season before taxes and agents’ fees, counting their endorsements, licensing and memorabilia payments, and other business endeavors.

Durant, who picked second but will miss the game itself with a knee injury, built a team that featured some firepower but no one else from Forbes’ highest-paid list. While Durant is posting an eye-popping $47 million off the court by himself, the star-power accounting clearly favors Team LeBron.

Gallery: The NBA's Highest-Paid Players 2021-22

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Of course, the February 20 game will feature 19 players beyond those six, and they aren’t slouches financially. Team Durant’s Devin Booker, for one, has a budding business career, with equity stakes in seven startups and an endorsement portfolio worth $8 million annually. The shooting guard was also just named to Forbes’ 2022 30 Under 30 list in the sports category. Then there’s Chris Paul—Booker’s Phoenix Suns teammate and All-Star Game opponent—who made $7 million off the court in the 12 months leading to Forbes’ highest-paid athletes list last year.

Still, even those two stars are a tier below their six peers. Here are the NBA’s most marketable All-Stars, ranked by their off-court earnings estimates published with Forbes’ highest-paid NBA players list in October.

1. LeBron James

Off-Court Earnings: $70 million

The Los Angeles Lakers forward would rank fifth on this list with his Nike deal alone; it pays the 37-year-old $32 million annually. James jumped to PepsiCo last March after 17 years with Coca-Cola, becoming the face of Mtn Dew Energy, and he started pitching a second label with the company in December as part of a Ruffles campaign.

2 (tie). Stephen Curry

Off-Court Earnings: $47 million

The Golden State Warriors guard is the NBA’s on-court king, with a $45.8 million salary this season, and the 33-year-old adds to that pile with $20 million a year from Under Armour as the face of Curry Brand. He is among the athletes venturing into the world of blockchain, having partnered with cryptocurrency exchange FTX and sold digital replicas of his sneakers. And his production company, Unanimous Media, is getting into publishing with Penguin.

Kevin Durant of the Brooklyn Nets shooting a free throw against the Chicago Bulls on January 12.

 STACY REVERE/GETTY IMAGES

2 (tie). Kevin Durant

Off-Court Earnings: $47 million

The Brooklyn Nets forward collects about $28 million a year from Nike and has a booming business with media company Boardroom. The 33-year-old is also behind Thirty Five Ventures, which has stakes in more than 80 companies, recently investing in fitness company Future. Durant added a new role in October as a pitchman for NBA Top Shot, the digital collectible platform, and is now working with crypto platform Coinbase as well.

4. Giannis Antetokounmpo

Off-Court Earnings: $41 million

The Milwaukee Bucks’ two-time MVP can count on about $12 million from Nike, and he picked up a sizable deal with digital collectible platform NFTSTAR last year. The 27-year-old invested in resale platform WatchBox in November and won a lawsuit in December over the unauthorized use of his “Greek Freak” trademark.

5. James Harden

Off-Court Earnings: $18 million

After days of rumors, the guard was dealt from the Brooklyn Nets to the Philadelphia 76ers at Thursday’s NBA trade deadline, but he faces no uncertainty off the court. The 32-year-old’s Adidas partnership is worth about $14 million annually, and he has emphasized equity deals in recent years, with stakes in massage-device maker Therabody and luxury watch brand Vanguart, among others.

Miami Heat forward Jimmy Butler during a February 7 game against the Washington Wizards.

 EVAN VUCCI/ASSOCIATED PRESS

6. Jimmy Butler

Off-Court Earnings: $11 million

The Miami Heat forward earned himself a big raise with his sneaker deal by signing with Li-Ning in 2020, after parting ways with Nike. The 32-year-old is at the center of a new ad campaign from crypto exchange Binance that—ironically—advises viewers to stop listening to celebrities’ advice on crypto investments.

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Brett Knight

Putin's Long Tables Explained: Why He Puts Some Leaders, Including Germany’s Scholz, At An Extreme Distance

TOPLINE

 

Russian President Vladimir Putin’s every move is dissected as fears escalate that he’ll soon order an invasion of Ukraine, but attention has recently turned to why Putin sits across from a comically large table during meetings with other world leaders, the most recent instance of which came Tuesday during a meeting with German Chancellor Olaf Scholz.

Russian President Vladimir Putin (L) and German Chancellor Olaf Scholz are seen ahead of their ... [+]

 SPUTNIK/AFP VIA GETTY IMAGES

KEY FACTS

The issue first took global spotlight last week after Putin and French President Emmanuel Macron sat at opposite ends of a table pegged by Reuters to be 20 feet long during their meeting in Moscow.

The extreme social distance came after Macron refused to take a Russian-administered Covid-19 PCR test, and Reuters reported Thursday it was because France didn’t want Russia to have access to Macron’s DNA, citing two anonymous sources close to Macron.

Another French official told Reuters the protocols were due to Putin living a “strict health bubble,” and the Kremlin confirmed the extreme distance is to protect Putin.

Scholz met the same distanced fate as Macron during his Tuesday meeting in Moscow, sparking memes and providing comic relief during otherwise tense negotiations.

The distance came after Scholz refused to take a Russian-administered Covid-19 PCR test, an unnamed German official told AFP Tuesday.

Putin even keeps his own aides at a major distance: Russian Foreign Minister Sergey Lavrov sat at the opposite end of a different, extremely long table during a one-on-one Monday meeting with the Russian president, but Lavrov’s distance may be due to his February 10 meeting with U.K. Foreign Secretary Liz Truss, who Lavrov met in Moscow 10 days after Truss tested positive for Covid-19.

Russian President Vladimir Putin (L) and Hungarian Prime Minister Viktor Orban (R) hold a meeting on ... [+]

 ANADOLU AGENCY VIA GETTY IMAGES

French President Emmanuel Macron (R) meets with Russian President Vladimir Putin (L) in Moscow on ... [+]

 SPUTNIK/AFP VIA GETTY IMAGES

Russian President Vladimir Putin (R) and Foreign Minister Sergei Lavrov hold a meeting at the ... [+]

 SPUTNIK/AFP VIA GETTY IMAGES

SURPRISING FACT

The extremely distanced table made its first appearance during Putin’s February 1 meeting with Hungarian Prime Minister Viktor Orbán, and The Guardian speculated at the time Orbán’s banishment was due to not quarantining before seeing Putin, a typical requirement for Russian officials coming face to face with the president. Putin has not kept all leaders at an extreme distance: Putin appeared in images in close proximity to Chinese President Xi Jingping and Kazakhstan President Kassym-Jomart Tokayev during separate February meetings with the two, causing some to suggest that Putin’s decision on who to distance is a political power play.

KEY BACKGROUND

The meeting between Putin and Scholz comes at a particularly pivotal moment in diplomacy between the West and Russia. Ukrainian President Volodymyr Zelensky stoked fear when he predicted Russia will invade Ukraine Wednesday, though his aides later clarified it was a dark joke. During a televised portion of their Monday meeting, Lavrov told Putin that Russia should continue to engage in diplomatic negotiations with the West, saying the possibility of a diplomatic solution in Ukraine is “far from exhausted.” Putin agreed to continue negotiations, even as the West increasingly warns of an impending Russian invasion. Jake Sullivan, the U.S. national security advisor, said Sunday an attack could come as early as this week, while U.K. Prime Minister Boris Johnson said Monday an invasion could come in the next 48 hours. Russia said Tuesday they will pull back some of its more than 130,000 troops reportedly at the Ukraine border, a preliminary indication that Russia is willing to walk down its aggression, at least temporarily.

Derek Saul