If you sold stocks during the recent virus-induced sell-off, I’d argue you let your emotions get the better of you, or you may be a trader, not an investor.
It’s OK if you get nervous — maybe healthy, even — when your account value plummets. But I don’t advise you to act on that emotion by selling out of what should’ve been an investment for the longer run.
During dramatic periods like the one we’re in, it can be helpful to take a step back and remind ourselves that we never have and never will know what lies around the next corner, but we have faith that, over the years, things will work out, unique challenges will be met and we’ll move on to new unique challenges.
A dozen years ago, we faced a systemic threat as we pondered the viability of our financial system.
Seven years before that, we suffered a horrific terrorist attack and prepared for more attacks.
Earlier still, we experienced assassinations of presidents, massive wars, a great depression and a pandemic.
And we persevered.
Anyone who held on to a diversified stock portfolio during these periods eventually should have found himself or herself ahead.
With long-term money, I prefer to own stocks, and expect that the price I have to pay for such potential growth is sudden but temporary drops.
I don’t believe I can have one without the other.
Right now, don’t let predictions or cocksure statements about how the coronavirus will play out in this country guide the way you invest. At best, these people are offering educated guesses. The exact outcome is unknown, which is part of what makes it scary.
Instead, ask how you think we’ll remember this period in 2025.
Will we have learned a few things about outbreak preparedness? Hopefully.
Will we have found a treatment regimen to combat this particular virus? Based on history, I choose to believe so.
Further, notice also developments like Chinese factories coming back online. Could China already be past the worst?
As for here and now, we may have to shut down factories, too. Or shut down schools and travel and make the most of remote-access technology.
Earnings may come in lower than previously expected. Who knows? This could even tip us into a recession. Plenty of bad news appears already priced into the market.
Note that all of this, from an investment standpoint, likely falls well within the short term.
In a few months, as in China now, we may see new virus cases dropping significantly.
In the end, do what you can to avoid infection. Help a neighbor. Help ensure your investments have shock absorbers like cash and money-market funds. Then, go enjoy one of your favorite activities. You’ll be happier for it.