The global stock markets have dropped the last 2 days in response of fears about the spread of the coronavirus. As the reports of deaths due to the coronavirus expand beyond China, health officials in most countries, including the US, are developing containment and treatment plans. Pharmaceutical companies around the globe are developing coronavirus drugs and vaccines. We will all be watching to see the interplay of these actions, hoping to spare all our citizens and communities from a possible epidemic.
Now to the stock markets. How do we respond?
- Sell out today after the markets have fallen, leaves us in a predicament where we could have to buy in at a higher price in the future after it recovers. This is not a winning choice.
- Wait a while and watch for confirmation that we are in a bear market and then sell near or at the bottom. This is an even worst choice.
- Stay invested in your well diversified portfolio, ride out the downturn, even consider rebalancing to buy stocks at a bargain and experience the next market rise. We will all feel relief that the markets demonstrate they are not down permanently for the first time in history. This has been the winning solution in these situations in the past.
Market timing during downturns is almost impossible to execute. Not knowing when to sell and especially not knowing when to get back in, means your odds of making two right decisions are less than 25%.
These are the times that instincts and investor psychology can be your worst enemy. Whether you are a client of ours or not, we want to help. Call or email us if you are feeling real mental distress over these two days. Our goal is to make success easier for you to reach your goals. We want to help you stay on the right track and to have peace of mind as you make a winning choice.
-Sandra Cleveland, Marshall Rathmell, Harold Sasnowitz-
-Some of the material above was provided by Bob Veres Inside Information