Planning your career is a difficult process, one fraught with potential pitfalls and made even scarier by the fact that you only get one shot at it. And if that weren’t enough, there are often a number of swirling factors over which you have no control — perhaps none bigger than the stock market.
However, the relationship between stock markets and jobs can work to your benefit as the wild fluctuations of stock prices could very well present you with new opportunities to pursue your career goals. It’s never a good idea to let stock markets dictate your long-term plans, but some strategic thinking about the current economic atmosphere could put you on the path to success.
When Markets Are Up: Do Nothing
Markets that are up today can just as easily come crashing down tomorrow. As such, trying to plan your career around the stock market is about as effective as planning it around the weather.
If you think you have a way to improve an existing career plan by taking advantage of a strong market, that’s one thing. But making a major change of course in your five- or 10-year plan based solely on soaring stocks is probably a recipe for disaster. So what can you do when the markets are up? Absolutely nothing.
When Markets Are Down: Do Nothing
That’s right, the same advice about not overreacting to robust stock market conditions applies to precarious stock market conditions as well. Whatever the market conditions are today, they will change — that’s one of the few ironclad guarantees you can get from the stock market. And if you’ve hit the reset button on your five-year plan because of a five-day or five-month market downturn, you’ll probably end up regretting it.
Consider small moves to use low stock prices to advance your existing career goals, but don’t change those goals just because your 401k is down temporarily.
When Markets Are Up: Prepare For a Job Change
It might seem a little backward to look for a new gig when times are good, but if you were already looking into other opportunities, beginning the process during a bull market makes sense.
For starters, the best time to consider selling stocks to pad your emergency fund — a sensible move if you’re anticipating a period of unemployment — is when they’re at a high point. And booming markets tend to make people more optimistic, which can lead to more companies accelerating their hiring plans and provide you with more options to consider.
When Markets Are Down: Invest More
Timing the market is never going to work out in the long run, but bumping up your 401k contributions or spending some of your paychecks on low-priced stocks is worth considering. Having a larger nest egg to fall back on also means more flexibility in your career, so building up your savings and/or investments now could put you in a better position should you choose to leave your job or change careers when the time is right.
When Markets Are Up: Go Back to School
Invest in yourself by going back to school. You can get a penalty-free early withdrawal from an IRA or qualified retirement plan for higher education costs. That said, if you are going to take the calculated risk of pulling cash out of stocks to fund tuition in pursuit of a more promising career path, you’ll get a better price in a bull market.
When Markets Are Down: Invest In Your Company
If you look around your company and see solid management and a great business model, consider taking advantage of a low share price and invest in the company you know you can believe in. That can be doubly true if your company has an employee stock purchase plan that offers discounts on that already-low market price.
The enormous caveat: be very careful about steering clear of potential illegal insider trading. It’s one thing to buy up shares because your co-workers and managers fill you with confidence in the company’s future (totally legal), it’s another to make an investment because you work in the accounting department and know that the next earnings report is going to be great (extremely illegal).
Just to be safe, ask the legal department at work or your manager for a little guidance to be sure you’re not crossing any lines before you take action.
When Markets Are Up: Plan For When Markets Are Down
Sometimes, the best thing you can do when times are good is to set yourself up so that you’ll have an easier time when they’re not. An “up market” is the best time to look seriously at your career, your portfolio, your living situation — basically, any part of your financial life — because high stock prices will give you a little more flexibility for change.
If you’re potentially one market slump away from being back on the job market, you’ll want to be ready for it. So taking “stock” of your situation when things are going well will help position you for even more good fortune down the road.
When Markets Are Down: Begin Looking For Work Elsewhere
If you’re working for a public company, you don’t know how management will react to slumping share prices. Hopefully they won’t overreact, but if pressure from shareholders is too much, paring down staff to cut costs is an unfortunately common strategy. So, even though you might have nothing to worry about, it can’t hurt to begin exploring the job market. See what’s out there, and hit the ground running if you do get let go by a management team desperate to boost its stock.
When Markets Are Up: Ask For a Raise
Hopefully, your company’s management won’t let share price guide its decisions, but even the best managers might be susceptible to letting broad market optimism bleed into their thinking a little. If you’re overdue for a raise, asking for one at a time when shareholders are happy and the future’s looking good might increase your chances of success.
When Markets Are Down: Let Your Hard Work Be Seen
If management does decide to trim staff in reaction to a bear market, you don’t want to be on the chopping block. Given that, you might consider finding subtle ways to remind management of how indispensable you are to the bottom line. If staying a little later or arriving a little earlier is something that your leadership team is going to notice, be prudent to make your hard work a little more visible while stocks are climbing back.
When Markets Are Up: Ask For a Promotion
Hopefully, your company is looking to reward your hard work with advancement based solely on merit. But timing your shot at a promotion while your company’s shares are doing well could give you an advantage. After all, it’s easier to talk about your role in the company’s success when the company is clearly successful. If you’re sure you deserve the promotion, let leadership know your intentions during a bull market — it might help you get to where you want to be.
When Markets Are Down: Update Your Resume
Dipping stock markets don’t mean your job is in jeopardy. Updating your resume, though, never hurts. Periodically making sure all your ducks are in a row for your next job search is a good idea — especially if you need to prepare a portfolio of work samples. And if there’s any chance that slumping stock prices increase the likelihood of you getting fired sooner rather than later, it makes things even more timely.
When Markets Are Up: Diversify Your Portfolio
If your company has a generous stock-option plan or employee stock purchase program, you might be guilty of letting those shares take up too large a portion of your portfolio. It’s understandable since you have a unique chance to invest at bargain prices you should absolutely take advantage of. However, in the long run, consider looking for chances to diversify your holdings so your financial future isn’t too dependent on a single company.
And a bull market could provide the perfect opportunity. If shares are near all-time highs, sell off company stock and rebalance your portfolio. Flexibility in your finances often translates to flexibility in your career path, so look to keep a healthy, diversified portfolio in place. Doing so can allow you to make career choices without having to worry as much about your next paycheck.
When Markets Are Down: Delay Major Purchases
Few things will hamper career advancement like being stuck in the wrong job because you can’t afford to be out of work. For that matter, few things will kill your financial future like getting let go at a time when your bills are higher than normal.
In either case, putting off big purchases in a down market could help you avoid getting stuck. And keeping your credit card bill lean while you’re unemployed makes the situation easier to deal with.
When Markets Are Up: Consider Executing Stock Options
Every company that offers stock options will probably have a different program, so depending on when the shares vest and how the options are structured, you might not have a lot of choice about the timing of when you execute.
However, it’s also worth noting that the benefits of exercising stock options are almost always at their greatest when the share price is at its highest. So make sure you’re clear on all the details of your plan. If you have some flexibility on when to exercise, doing so when the company’s stock is high makes sense.
When Markets Are Down: Consider Companies/Careers With Stable Stock Prices
Of course, if you are in a career where you start looking over your shoulder every time markets are down, searching for a way out is only logical. After all, it’s hard to be at your best when the potential for a devastating market correction is always hanging over you like a sword of Damocles.
Plenty of jobs are insulated enough from the periodic rise and fall of stock prices that you can breathe relatively easy whether markets are up or down. If you really don’t think you can handle any more worrying about your future every time the Dow takes a tumble, start exploring ways out of your situation.
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