Why It’s Wise To Stay Calm As The Coronavirus Rocks Markets
The global economy is in question as Covid-19 ramps up, changing life as we know it. Public anxiety is growing just as rapidly, while investors monitor the major industries affected by this pandemic with apprehension.
History is being made again and again, as the Dow Jones Industrial Average peaks and plummets. It reached the highest peak, and two weeks later made the deepest dip – dropping 1,000 points in 24 hours – on March 9th. This is the most dramatic behavior since the stock market crashed in 2008.
Money is behaving as predicted in this period of uncertainty. Investors are pulling their cash out of stocks and putting it directly into bonds. The current market volatility may have people considering halting investments altogether in favor of putting the money into seemingly more secure alternatives, like the cookie jar in the kitchen.
Though it’s tempting to drop your investments, that might not be the smartest decision. As with the SARs and Ebola outbreaks, the market will suffer; however, if history proves anything, the market will also recover. Here’s why you should consider hanging onto your investments through these dark times…
If You’ve Heard It Once, You’ve Heard It A Thousand Times
The stock market is no spring chicken. It’s been through the ringer, again and again, and it always springs back into position. Even after significant losses, there are always major gains to come.
Niagara University’s Tenpao Lee talks about the difference between short-term and long-term in the stock market world. There is up-and-down fluctuation, but over time, the market will always recover. While it’s a natural human reaction to retreat when danger looms, experienced investors have the grit to go all-in for the long haul.
A Nest Egg Isn’t Build Overnight
Investing rarely results in a rags-to-riches success story. This is a perfect time to make some decisions about which direction you want to take your investments, dig your heels in, and make some commitments. Retirement can still be comfortable, if you stay consistent.
There are also a few things you can do to ease your stock-market blues. Consider diversifying your investments to decrease your overall risk. Consider transitioning to a more conservative investment plan, and whatever you do, don’t look at your 401(k).
A Not-So-Good Market Means Cheaper Stocks
You may not have considered this, but why not buy the stocks now, while they’re dirt cheap? A dipping market brings down the price of stocks. It’s a glass half-full situation. Instead of focusing on what you don’t have now, consider what you could have in the future – that is, if you move on this opportunity.
This might even be the time to expand into new markets. Tenpao Lee reminds investors to make sure their portfolios remain diversified. Going all-in on one stock is still a big risk. He recommends investing in less risky, exchange-traded funds (ETF). This is possible to do through several reliable robo-advisors.
The most important thing investors can do avoid giving in to panic. This is a harsh ebb, but it will inevitably be followed by a lucrative flow. It’s not a question of if… but when.