My thoughts on the Coronavirus market volatility can easily be summarized into this one chart: How have major viruses effected a major index in the moderate/near term? Not even the long term, which should be the horizon for our more volatile equity investments some may worry about. The outlook doesn’t look so bad to me in these cases..
*Source: “How the stock market has performed during past viral outbreaks, as coronavirus infects 31,000,” MarketWatch. February 7, 2020.
I am not selling out of my equity investments. There is a name or two in the domestic stock market I have been interested in buying. In fact, I have put new money into one of them at these current prices.
As far as the market-focused daily shows, the often meaningless second by second updates, geared toward the retail investor, should not be taken into account by many retail investors themselves. Some of the ‘advice’ leads to giving the retail investor confidence in making terrible behavior investment decisions, like “selling out”, “rotating into defensive stocks” and “moving to bonds”. All this typically equates to is selling low and buying high, locking in losses. That’s the opposite of good investor behavior.
The right thing to do during these times does not require a daily market show- rebalance your portfolio by buying low and selling high have the confidence to execute your well thought out strategy that you (or we helped you) created when things were more ‘normal’. If you do not have a plan for times like these, call me and I can help you make one.
This is easier said than done, but as a fellow retail investor, do yourself a favor- turn off the market daily show (let me worry about things if you’re a client) and spend time with your families, tinker around the house or read a good book. Catch up on this in the morning paper when cooler heads have prevailed and perspective can be applied.