Coronavirus & Stocks: The Experts Weigh In
Updated: Feb 27
All economies have a recession and the US is long overdue. Right now there is just extreme volatility as people panic and sell off securities. However, the best advice is to not panic and sell your shares in a down market such as this.
Why a stock market ‘sell-off’ doesn’t mean you should sell
TeamBiddles mission is to empower investor success, and we are committed to weathering this storm with all investors. We are confident that with a sustained focus on long-term investing principles, investors will manage through this crisis just fine.
For reasons why you shouldn't panic or make rash decisions Check out these articles below
Here’s what Goldman Sachs is telling wealthy clients to do in this market
How to stay calm when markets are dropping: A roundup of expert advice
From the Oracle of Omaha: Warren Buffet
When Will Stocks Bounce Back?
A recession is widespread economic decline that lasts for at least six months. A depression is a more severe decline that lasts for several years. For example, a recession lasts for 18 months, while the most recent depression lasted for a decade. There have been 33 recessions since 1854.
Why Shouldn’t I Panic? Morningstar an Investment research firm has an in depth analysis of global and domestic impact.
The Main Takeaway: Don't flee the market in a panic, but rather embrace the turmoil as an investment opportunity--you'll be better off in the long run
Read More Here
Excerpts From The Reformed Broker
Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this?
Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. 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, the majority of 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 who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.
All-in or all-out are terrible strategies.
You cannot afford to miss the 25 best days in the market, or your returns are wiped out
and you may as well have simply sat in 5-year Treasurys. The catch is that the 25 best days are frequently clustered among the 25 worst days. You can’t have the up without the down. Anyone promising you otherwise is either uninformed or a liar. I have often observed that it’s usually some combination of the two.
In October of 2011, we were in the midst of the European Debt Crisis and stocks were rising and falling by 2 and 3% every day. Volatility was off the charts. I wrote about the stupidity of being all-in or all-out nine years ago, in the middle of that storm, and every word of it still rings true right now.
And To End An Excerpt From E-Trade - Keeping It In Perspective
Make no mistake, this turbulence is unnerving, but eventually all shocks run their course. The market, after all, has bounced back from the Great Depression, Pearl Harbor, the Cuban Missile Crisis, the 1987 crash, the dot.com implosion, 9/11, the 2008 financial crisis, the European debt crisis...the list could go on. So, if history is any indication, we will likely get through this, even if it’s a bumpy ride.Here’s some important points to keep in mind:
Asset allocation and diversification are powerful tools. Diversifying a portfolio across asset classes and investments is the fundamental framework of a defensive investor and can help provide guardrails for weathering conditions like the ones we are currently experiencing.
This is an opportunity to truly assess risk tolerance. During a long-running bull market, and especially in years when equities are producing record returns, it’s easy to lose sight of how much risk you are honestly comfortable with. Investors with overly aggressive asset allocation may decide they want to adjust their mix to something more conservative. Alternatively, investors who are comfortable with their risk level may want to reassess the performance of riskier assets and re-balance accordingly. For those with a managed account, you can see your allocation right on your Portfolios page. For those with a standard brokerage account, we have a portfolio analysis tool that can help: When you’re in a particular portfolio, click on the Analysis tab and scroll down.
Keep emotions in check. This is the biggest challenge for investors, especially during a bear market. Just as investors should be cautious about chasing high returns in a “risk-on” market, letting emotionally charged events and panic-inducing headlines influence trading in a “risk-off” environment could leave you uninvested.
Bottom line: If you bought assets in the past few years, and now want to sell, you may be running the classic risk of buying high and selling low—the opposite of prudent investing. As unnerving as these times may be, keeping cool with a well-diversified portfolio aligned to individual risk tolerance remains as good an approach as any. Read More Here
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