You are aware of the COVID-19 outbreak and the effect it’s having on world financial markets. If you are keeping a long-term perspective and are okay with not making changes to your portfolio, congratulations! That’s exactly the mindset needed to have a successful investing outcome.
A brief downturn is relatively easy to stomach, but continuous bad news can test the resolve of the most resilient investor. Here are a few points to consider that may help you weather the storm.
- Your investments are probably not all in stocks. You probably have money in cash or conservative bond investments which bring a degree of stability to your portfolio.
- Recall the financial crisis of 2008 when the underpinning of the entire US financial system was in question. The current uncertainty is around a flu like virus, which seems less troubling than a system that seemed ready to collapse 12 years ago.
The graph below may provide some reassurance. The red area is the market downturns of 20% or greater dating back to 1926, and the blue area is the markets return pre and post downturn. There are no guarantees, and past performance may not be indicative of the future but understanding history can be insightful.
History has taught us there is investment success at the end of the tunnel. But we don’t know how long the tunnel is. Keeping a historic perspective in mind when all you see ahead is darkness may be helpful. If you are experiencing any discomfort, please do not hesitate to contact me. You will probably find my perspective and objectivity comforting. I am here to help.
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