This week, I have been bombarded with messaging warning of increased historic market volatility in September and October. According to the Stock Traders Almanac, the Dow Jones often drops between Rosh Hashanah and Yom Kippur. (Rosh Hashanah begins on the evening of September 18 this year.) Accordingly, the traditional advice tells us to “Sell Rosh Hashanah, Buy Yom Kippur.”

Another trading phenomenon, known as “Octoberphobia,” highlights how the market tends to drop precipitously in October, especially in election years. For example, in the week ending in October 10, 2008, the Dow fell 18.2% and marked its worst weekly decline since 1901. Interestingly, and perhaps something that will underscore the point I will make in just a moment, October has also historically seen strong turn arounds. Some evidence also suggests that the S&P 500 rises when incumbent Presidents re-win the White House in November. An incumbent has won the Presidential election ten times since 1944, and of those ten victories, the S&P 500 gained after seven of them, dropped after two, and maintained after one.

All of this said, what should you do to prepare for (possible) enhanced market volatility? My short answer is, “You should prepare to manage your emotions.” My long answer ties into a concept known as Reversion to the Mean. To explain Reversion to the Mean, let’s consider two market indicators: market return and investment return. Investment return is based on the returns earned by U.S. businesses as measured by their earnings growth and dividend yield. This is the theoretical, true return an investor could earn when investing in a company. Market return is the actual return investors earn on their investments each year. As opposed to investment return, market return includes speculative return, or how much more or less an investor is willing to pay for a company stock compared to the actual value of that company. As you can imagine, market return fluctuates around investors’ emotions, swinging upwards when investors get more confident and downwards when investors become fearful. Because investment return is based on company fundamentals, investment return tracks a fairly consistent upward trajectory in line with long-term, slow-but-steady business growth. Interestingly, while market returns due to investor emotions can jump wildly in the short-term, in the long-term, market returns revert back to the mean. This means that since the early 1900s, market returns and investment returns have largely tracked each other despite short-term jumps or dips in market returns.

Now this is a lot of words to say the following: the market may move dramatically in accordance with speculation and investor emotions. However, in the long run, market returns will return to tracking company fundamentals and growth. So, as long as you stay focused on company fundamentals and long-term investing, the impact of short-term swings shouldn’t hold forever.

Even still, it’s hard to not become overwhelmed, scared, and protective when the market is volatile. I’m confident that repeating, “It will revert to the mean” in your head, over and over again, will not be the mantra that soothes your anxiety. Instead, I encourage you to think about how much risk you’re willing to assume in your portfolio. How much loss are you willing to experience in order to experience growth? Better understanding your own risk tolerance can help both you and I develop a portfolio that matches your comfort level with market swings. While this doesn’t guarantee a specific rate of return or protection from loss, a risk assessment can help you feel comfortable that, even when markets get volatile, your portfolio is invested in a manner that accounts for your risk tolerance. On top of that, you can take comfort in knowing that short-term volatility will pass.

All that said, I have begun using a new online Risk Assessment tool to help you and I determine how much risk you’re willing to assume in your portfolios. To better understand this tool, I encourage you to watch the video below. Even better, to begin employing this tool, you can click the button below or this link to complete your own questionnaire. (Take note: the questionnaire often does not work on Internet Explorer. You will likely need to use a program such as Google Chrome.) From there, you and I can continue to hone and improve your long-term investment plan such that, when market volatility happens, you can be comfortable knowing that we are all still working towards your long-term goals.