Coronavirus. Super Tuesday. To say it was a crazy week for the stock market would be an understatement. When the market is swinging wildly and the headlines are changing by the minute, it can be scary, unnerving and confusing for the average human. If you find yourself wondering should I be doing something? Read on for 3 tips on how to handle this wild ride:
1. Ignore the Noise
Dow Plunges 700 Points as Wall Street nears end of a turbulent week – CNBC
Stocks Plunge and Yields Sink – NYTimes
Dow dives as virus fears dominate roller coaster week – Washington Post
These headlines are alarming. Today it’s the coronavirus, in 2018 it was the trade war. There is always something in the headlines or happening in the world that will be impacting the markets, discouraging you from investing or encouraging you to take your money out. I don’t believe there has ever been a time that a green flag went up and the media said, this is a great time to invest! Whether it was 9/11, the Great Recession or the coronavirus, the market has endured has shocks and downturns before and it will again. Don’t let the headlines scare you into making investment decisions. Remember, despite how convincing the media may be, saying what the market is going to do is trying to predict the future and NOBODY can do that.
2. Don’t Let Emotions Get in the Way
Big swings and downturns in the market are incredibly uncomfortable. Its times like these where you can make a bad decision. Some of the people that suffered the most in the 2008-2009 financial crisis were the ones that got out & moved their money to cash. In fairness to them, if you read the news from 2008-2009 you would have never bought a single share of stock in your life – you would keep it all under the mattress. But in fact, that was the time you should have been backing the truck and going on a shopping spree. For example, in 2009 Netflix stock was around $5/share. Today, even with the recent pullback, it is trading at $369. If you gave into your emotions and parked your money in cash, you locked in those losses and missed the ability to grow your money all the way back and then some.
3. Remember What You’re Investing For
When we talk about investing, we are looking at money we won’t need for at least the next 5 years. You need time to ride through market cycles. Most of us do the bulk of investing through our retirement plans. Think about retirement – if you’re a millennial, you are DECADES away from retirement. And then, you will have DECADES in retirement. So does it really matter what the market is doing today? If anything, a market downturn works to your benefit because you are buying investments in your retirement account at a discount!
In roller coaster markets like this one, take a deep breath, ignore the noise, and focus on the end goal. If you work with a financial advisor, this is the time to go to them. In my next post, I’ll be talking about what financial advisors do, when do you need one, and how do they get paid. Stay tuned!