Insight

5 Things to Remember During These Times

It is no secret that news of the coronavirus has created mass uncertainly through the stock market. Most of which is surrounding the economic slowdown as a result of the virus. If you watch the news regularly, it may seem like this is the end of times. We are here to remind you of a few things about long-term investing.

1. Your retirement plan is probably not going to change
And neither will the future use of your money, which means throwing out your long-term plan or radically changing your portfolio makes absolutely no sense. Locking in permanent losses today, while fleeing to an asset class that yields nothing, is a surefire way to be unable to pursue our dreams tomorrow.

2. Nobody called this
Plenty of people had been calling for a recession this year, but they are the same people who have been calling for recession every year. A perfectly correct economic or market call, that cannot be repeated in the future, is worth just as much as no call at all. We have written before about the cost of listening to these “armagedonists” before and that article can be found here.

3. All in or all out are terrible strategies
Investors cannot afford to miss the 25 best days in the market, or your returns are wiped out. The catch is that the 25 best days are frequently mixed in among the 25 worst days. Unfortunately, you can’t have the ups without the downs and anyone who promises you otherwise is either wrong or a liar.

4. Why don’t we just sell everything and wait this out?
Today is March 17th. Precisely eleven years ago, in 2009, the stock market reached its abyss during the financial crisis and stopped going down. There was no reason. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, most participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later that had gone to cash and still hadn’t gotten back into equities. They missed out on hundreds of percentage points in compounding on their assets.

5. Reducing risk should be part of your plan
Having an effective hedging strategy can help reduce the effects of volatility over the long-term. We believe in getting some downside protection for our clients without giving up too much upside.

Conclusion 
The worst thing that you can do now is panic. Financial decisions based on emotions have proven time and again to be detrimental to investors. Investing for the long-term will benefit those who are patient, disciplined, and have a plan. If you would like to discuss how we can help you with a plan you can schedule a 15-minute call with me here: