To recap: markets suffered their worst week since during the 2008 financial crisis with all three major indexes falling over 10%. It’s shocking and it hurts to see our portfolios take that kind of hit. Will this market sell-off continue? Will Coronavirus be the catalyst that turns a market correction into a bear market or a recession, or are we overreacting to a virus which may turn out to be far less impactful and harmful than winter flu? We don’t know.
But we do know stocks are at levels we saw in October, 2019. Had stocks stayed flat from then until now, how would we feel? We’d probably have less angst and anxiety than we do now, right? If our portfolios had stay flat for five months – even with this Coronavirus uncertainty – our emotions would probably have stayed flat, too. But when our portfolios make slow and steady movements up, but then come crashing down in a week and half, we feel different, despite the result being the same – and that result is today’s portfolio value mirroring October’s portfolio value. So the outcome is the same, but the route we took to get there was different.
Regardless of the route, we’ve got to stay focused on the long-term growth of our stock portfolios. Global uncertainties happen, market corrections happen, bear markets happen, recessions happen, and all of those will continue to happen, but what will also continue to happen is the one ultimate direction of the stock market: UP!
If we go back to that worst week in the last 12 years, the S&P 500 was around 900 (before ultimately bottoming below 700), today it sits a touch over 3,000. And think about all the global events, positive and negative, that have occurred since then…take the Coronavirus, the financial crisis and everything in between and realize that all market downturns do is present great opportunities for you to build wealth…great opportunities for you to buy good stocks on sale.
And that’s what we do for our clients - we stay calm during times of panic and we steadily focus on the long-term wealth building opportunities that is a diversified stock portfolio while seizing opportunities to buy good stocks on sale.