We will persevere!
In my thirty-six years as a financial advisor, I have pretty much seen it all- or so I thought, from Black Monday in 1987, the Dotcom Bubble, 9/11, and the 2008-2009 Financial Crisis. Now, with the concerns over Covid-19, we are once again experiencing a major global correction due to the pandemic.
Though the headlines can be scary, and the speed and magnitude of this market decline have been unprecedented, I will say that over my many years of experience, I know one thing with certainty- we are a strong and resilient country, and we shall get through this.
To help you navigate this difficult time, below are a few thoughts:
Those investors who panicked and sold in any of the previous downturns- lost.
Fear can cloud your judgment. Though your emotions might tell you to get out of the stock market, use your logic, and stay the course.
Make sure that you have enough cash on hand for regular and unforeseen expenses but keep a long-term perspective for the remainder of your portfolio. Discarding your long-term plan or radically changing your asset allocation does not make sense.
Masses of people are panicking and acting as if the virus is a death sentence for all. Remember, this disease will run its course, as will its impact on global markets. I’m not saying that there will not be severe economic collateral damage or recession, but the world is not coming to an end.
For your mental health, limit your exposure to the barrage of daily news, if possible. Yes, this pandemic is extremely serious and could get worse before it gets better, but constantly listening to negativity can affect your mental and physical well-being.
For most of you, your portfolio is broadly diversified among various asset classes in addition to stocks. If you are wondering, “why don’t I just sell my stocks and get back into the market when the dust settles?”, you will find that it is very difficult to know when that will be. Often, the best 25 days in the market are clustered with the worst 25 days.
Stocks typically start rising 3-6 months before the economy recovers.
Keep things in perspective- Despite the headlines, according to the CDC, 81% of cases in China were mild. The same is holding true for those in the US thus far, and most people who are infected will recover.
For those of you who can weather the volatility and risk, the stock market is on sale. There are many good strong companies at reduced prices.
As actor Tom Hanks recently wrote after being released from an Australian hospital after suffering from COVID-19, “Hey folks, Good News: One week after testing Positive, in self-isolation, the symptoms are much the same. No fever but the blahs. Folding the laundry and doing dishes leads to a nap on the couch. Bad News: My wife, Rita Wilson, has won 6 straight hands of Gin Rummy and leads by 201 points. But I have learned not to spread my Vegemite so thick. I traveled here with a typewriter, one I used to love. We are all in this together. Flatten the curve." – Hank
As always, we are here for you. We will stick it out and get through this together. As I have said before- this, too, shall pass.