I know many people are worried about their investment accounts right now, and I understand why. We’re hearing the word “crash” to describe what happened with the market yesterday, when all three major indexes registered one of their largest percentage losses in history. Several events contributed to this sell-off, most notably the oil war between Saudi Arabia and Russia, and, of course, the continued spread of the coronavirus.
Frankly, I’m not surprised about this occurrence. As I said in the online webinar I held on February 7, I anticipated a correction on the horizon and likely a big one, and in the webinar, I explained my reasons for expecting it. But I also know expecting this kind of turmoil doesn’t necessarily help folks know how to handle it. I’ve been in this business now for almost twenty years, including the recession of 2008, and here are some suggestions for how to handle it:
- Stay calm. Investing is a long game with a certain amount of risk, and it’s important to remember that history shows “this too shall pass.” I know it’s hard to practice patience in these uncertain times, but panic and fear help no one, and decisions should never be made under their influence. If you are triggered into these emotions by watching the news or looking at your phone, take a break and focus on the positives in your life.
- Sit tight with your plan. I hope you have established a long-term plan for your portfolio, either on your own or with the help of a financial advisor. If so, now is not the time to change course. For Chicory Wealth clients who are already in retirement and receiving money from their funds, we have their assets well diversified, with enough cash assets and short-term bonds to cover their needs for at least twelve to eighteen months. For those clients who are not portfolio dependent, we also have their assets well diversified and remind them that ups and downs (even strong ones) are an inevitable part of investing. We invest in only very high quality companies that have great Environmental, Social and Governance metrics. This doesn’t mean they are immune to broad market declines, but it does mean that they are, in our opinion, better positioned to weather these kinds of storms.
- Consider working with an advisor. Those who are managing their assets on their own might be feeling particularly alone in these choppy financial waters. A financial advisor who is a fee-only fiduciary can be an advocate and guide during these times. That’s why I and the rest of my team at Chicory Wealth got started in this business – to help people understand and navigate our society’s complicated financial system and to help them use their resources for the betterment of themselves, their community, and the planet.
- Wash your hands. Yes, this has to do with staying healthy, not improving your portfolio. But the two are actually linked, when you think about it. Washing our hands and taking other important precautions protects not only ourselves but our communities. And in the long run, a healthy community means a healthy economy. Let’s work together to make it so.
Disclaimer: The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute personalized legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. An investor may experience loss of principal. Information obtained from third party sources are believed to be reliable but not guaranteed. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.
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