Patience is the only tool we have at the moment. At some point the virus will be under control, and a recovery will begin. Hopefully it’s sooner, but in any case it will happen. Investors should focus on making sure their portfolios are properly constructed so that when recovery occurs, they will be positioned to participate.
A few observations about previous economic crises:
“Those who stayed fully invested in equities through the turbulent market of 2008-2009 are grateful they did.’
If you are one of those who resisted the urge to change your investment strategy during the financial crisis of 2008, you know how good it felt when the inevitable recovery rewarded your patience.
If you remember the mood in the midst of that crisis, it was not unlike the feelings of today.
Those who attempted to alter their plan in the midst of that crisis did not fare as well. I won’t bore you with charts and graphs, but it is universally agreed upon that those who stuck to their guns came out the best. I recommend that you stay the course, make sure you are well diversified, and pay most attention to staying healthy.
You’ve heard the phrase “investing involves risk.”
Most people think risk means the chance of something bad happening. I think risk means the chance of something unexpected happening, either good or bad.
Since we can’t really know what will happen in the current crisis, especially in the near term, risk in financial markets is higher than it was. But, as we witnessed last week, the unexpected increase in values is also an expression of risk, and if you continue to hold a well diversified portfolio, you will benefit when risk shows itself as an upturn.
Those who stayed fully invested in equities through the turbulent market of 2008-2009 are grateful they did.
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Plectrum Advisers LLC
Registered Investment Advisor