As of the writing of this article, there is no shortage of news on the COVID-19 (Coronavirus) that is currently spreading throughout the world. It seems as though the virus is the only subject being covered on TV, online, at work, or conversing with friends. Financial markets hate uncertainty, and there is still much plenty of unknowns about the virus and its effects. As most investors know, this is causing extreme angst and volatility in the financial markets and is cause for distraction and emotional concern in personal portfolios.
Without downplaying the seriousness of these events, it is worth noting that market downturns in the past 40 years are not rare events. A ‘Correction’ is typically defined as a decline of 10% or more. Since 1980, there have been 12 ‘Corrections’ not including the current one. A ‘Bear Market’ is a decline of 20% or more lasting at least two months long. Since 1980, there have been 8 ‘Bear Markets’ not including the current one. In addition, since 1980 there have been five Recessions, which are based on economic conditions and not necessarily financial markets. Recessions are defined as two or more successive quarters of declines in economic conditions.
Emotionally, there is typically a strong temptation to just ‘do something’ to stem losses. Staying the course on your financial plan and sticking to it is usually the best defense in times like those described above. There are many examples you can find of jumping out at lows of the market and not getting back in at the right time, missing out on the quick daily reversals we have seen over the last two weeks and the longer term upward trend of the market. Vanguard gives the following example in recent times of trying to time the market.
1.Vanguard – Beat the Short-Term Market Jitters
Additionally, the data from the following charts provided by J.P. Morgan put some of the current volatility into perspective.
2. J.P. Morgan Guide to the Markets, January 31, 2020
The moral is to stay the course in your financial plan. If you don’t know your course, are confused about what to do, or may not be getting the support that you need from your current advisor, give us a call and we can help you chart your course.
Lastly, we would like to give you a little inspiration from Ralph Waldo Emerson:
“Write it on your heart that every day is the best day in the year.
He is rich who owns the day, and no one owns the day who allows it to be invaded with fret and anxiety.
Finish every day and be done with it. You have done what you could.
Some blunders and absurdities, no doubt crept in.
Forget them as soon as you can, tomorrow is a new day;
Begin it well and serenely, with too high a spirit to be cumbered with your old nonsense.
This day is too dear, with its hopes and invitations, to waste a moment on the yesterdays.”
GENCapital provides objective, transparent, and knowledgeable financial advice because it’s the right thing to do. GENCapital is a Fiduciary which means we are obligated to always put our clients’ interests ahead of our own. We are advice-based, client-centric advisors who prefer to sit on the same side of the table with you as a valued customer. With a concierge approach, extensive resources and generations of experience, we go beyond traditional investment strategies and partner with you to deliver a plan customized to your goals. Based in Atlanta, Georgia, our team of qualified and reliable professionals is committed to developing long-term relationships and building your wealth for generations.
GENCapital is a wealth management firm offering investment management, financial planning and business advisory services for individuals, families and organizations. With a concierge approach, extensive resources and generations of experience, we go beyond traditional investment strategies and partner with you to deliver a plan customized to your goals. Based in Atlanta, Georgia, our team of qualified and reliable professionals is committed to developing long-term relationships and building your wealth for generations.
For more information, contact us.