Market Turmoil Survival Kit
The coronavirus outbreak, lockdowns, and global recession fears have created widespread panic on Wall Street. Over the past three weeks, the Dow plunged more than 1,000 points on several occasions, including a 2,000-point drop on March 9 that triggered circuit breakers.
You, like many investors, may have run for the hills, and may now be sitting on the sidelines with your hands in your pockets. The key to surviving any market correction, however, is simple: Don’t panic.
In the words of Peter Lynch, “The key to making money in stocks is not to get scared out of them.”
Easier said than done with these wild market swings…
That said, we’ve put together a few tips—a Market Turmoil Survival Kit—to help you think first and react second. In the end, we hope this advice helps you not only survive but also thrive in the current market correction.
Turn Off the Financial Media. The financial media has created a “sky is falling” mentality. Developments involving the coronavirus or global economic data ensure that there’s a new negative headline with one sole purpose, to scare you. The reality is that “fear sells.”
But, as we discussed in the “Don’t Let Coronavirus Fears Scare You Out of the Market” article, the stock market rebounded strongly following the SARS-induced panic back in early 2003. In fact, from the March 2003 lows, the S&P 500 and Dow surged nearly 39% by the end of the year. So, the stock market has recovered impressively from sharp corrections in the past—and we believe it will bounce back strongly from this pullback, too.
Don’t Time the Stock Market. There’s a lot of conflicting views out there right now. Some market pundits are advising investors to “buy, buy, buy,” while others are screaming “sell, sell, sell” and you’re stuck in the middle wondering who is right.
The best advice we can give you now is that you shouldn’t try to time to the stock market. Trying to predict the market’s next move often hurts investors more than it helps them. You could buy back in too soon, or you could wait far too long to put your cash to work.
Focus on Your Long-Term Goals. It can be hard to stay focused on the big picture when the present is characterized by daily market swings, but we need to remember that the stock market never moves straight up; there will always be pullbacks. We can’t allow these near-term dips to deter our long-term investment goals and financial plans.
Be Patient. You shouldn’t make drastic changes to your personal portfolios when there is blood in the streets. In the words of Warren Buffett, “The stock market is a device for transferring money from the impatient to the patient.” So, if you can keep your head firmly on your shoulders while the rest of Wall Street is losing their minds, you’ll be in a much better financial position in the upcoming months.
Here at Nicollet Investment Management, we also encourage you to not let near-term events derail your long-term investment strategy. Our team of financial advisers is ready to initiate one-on-one discussions and perform in-depth analysis of your financial situation and portfolio to help you determine what steps to take in the current market correction.
Call Nicollet to schedule your free portfolio review today.