Info for Investors
The Stock Market and ‘Sheltering in Place’
“These are the worst of times, and the best of times.”
Watching the financial markets recently has been like taking a roller coaster ride.
It can be very distressing to look at your stock portfolio at this time. It also doesn’t help that many of us are “sheltering in place” while following the CDC COVID-19 Guidelines.
Often there is little to do but worry. It can cause anxiety. And frankly, it can be frightening. Especially because in this market it seems that “this time is different” from anything else we’ve seen before.
Is the Market Different This Time?
The simple answer is: Yes, it is different.
It is always different, which is why we have uncertainty in the stock markets. Uncertainty in the markets causes the stock volatility we are seeing. This is exactly the way markets are supposed to behave in an uncertain environment without all the necessary information.
Are We in a Bear Market?
A bear market occurs when a broad market indicator decreases by 20% from its high.
Technically, we entered bear market territory on March 11. This is when the S&P declined 20% from its high on February 19. Often a bear market is accompanied by a recession and can last from 12 to 18 months.
What Should Be Done in a Bear Market?
First, don’t panic.
The worst decisions made are most often emotional, impulsive decisions made out of fear.
Second, realize that it is not possible to time the market.
• Investing $1000 on January 1, 1970 in the S&P 500 until
March 20, 2020 would give you a value of $121,353.
• If you were out of the market on the 5 best days during
that period, your investment would then be worth $77,056.
• Had you missed the 15 best days;
it would be worth $43,472.
• Missing just the 25 best days during that period
would result in a value of $26,989.
If you have worked with a CERTIFIED FINANCIAL PLANNER™ to create a plan with a long-term portfolio that is well- diversified with an appropriate amount of risk – then you have already built in protection to withstand market downturns (as long as you remain calm).
Often, because prices are low, bear markets are actually a good time to invest.
This is what Warren Buffett meant when he said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
And as Charles Dickens said, “These are the worst of times, and the best of times”.
If you are feeling uncertain about your financial situation, please Contact Us?
Allen Wealth Advisors
At Allen Wealth Advisors, we can help answer your questions.
And we will assist in creating workable plans for the future.
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