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Fear has taken over the stock markets, events are being cancelled and with Trump’s speech last night banning travel from Europe, it may feel like everything is spiraling out of control. Saudi Aramco launched a price war, causing the oil market to plunge. Also, it’s an election year. Oh, and to top it off, Tom Hanks, the ‘Nicest Guy in Hollywood’ now has the dreaded coronavirus, or COVID-19. The media is causing a feeding frenzy, and everyone is eating it up.
I will be the first to admit that I am reading all of the articles that are coming out – good and bad, not to further any fears or biases but to try to arrive at an educated understanding of what is happening during this remarkably crazy time. Emotional selling and panicking is happening right now – this is the time that will determine the success of the individual investor. Will you panic and sell off? Or will you be courageous and patient?
The reality is that no one can predict when the bottom of a market hits – those who try and hop in and out of the market typically usually end up missing important recovery days, resulting in severe underperformance compared to those who dig their heels in and ride it out. Those investors who keep cool and continue to add to their portfolios while stock prices are low will outperform and ultimately profit from this crash.
To quote Warren Buffett:
"We've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children."
Now for the good news. There’s a 100% chance of an eventual recovery. Natural disasters such as the actions caused by the COVID-19 outbreak delay economic activity but do not change the economy’s long-term growth potential. As we continue to focus on fundamental strength of all our strategies’ portfolio holdings (profitable, growing revenues, low debt), we maintain the conviction that we will deliver strong returns in the long run.
What to do right now? It’s normal to feel anxious and concerned about what’s happening. Start by acknowledging these emotions, then remind yourself of your own goals and objectives. Investing is a journey and sometimes the road can get bumpy causing a less than comfortable ride; but if we get off the road we’ll never get to where we want to go.
Hang in there.
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