In a bear market, worry and panic can sometimes propel investors to want to sell out of their investments and “wait-it-out”.
It’s natural instinct to want to avoid or get out of a situation that is causing stress and fear. It might seem like the logical thing to do but most often than not, it isn’t. Over the last 30+ years of being in the investment business I’ve seen market cycles come and go. I've never seen a situation where making knee-jerk decisions around short-term volatility is ever advantageous and I don't see any exception to this rule in the current circumstances. During periods of heightened concern and headline news screaming about all the bad stuff that's going on, it’s important to remember that successful investing is more about listening to your head than your heart and gut.
It's the discipline that investors exhibit today that will get them successfully through this short-term volatility and take full advantage of the bull market recovery that will come.
Eventually, the virus will run its course and markets will revert to a more normalized situation and money managers will turn their attention to hunting for yield.
With yield unavailable in the bond market, pension funds, endowments, and other institutional pools of money will flow back to stocks to take advantage of the valuation levels and attractive dividends.
This is not an “if” - it's just the “when” that is the open question. We have been through severe market volatility before and have been able to identify a few key strategies that although may seem simple intellectually, they are the strategies that have helped investors avoid making short sided decisions that can affect them long-term. Here is the PDF for you: The 5 Strategies for dealing with a difficult market
If you have any questions or would like to set a call or a meeting to discuss your financial plan, contact us today!