One year ago this past week, on March 12, 2020, I wrote my first post to this crazy blog I’ve started. A quick trip down memory lane would reveal that this was the day that the NBA suspended its season and the NCAA barred fans from March Madness (only later to cancel the Tournament altogether). COVID-19 was the dominant headline…the unknowns, the fear, the shutdowns…all wreaked havoc on our lives…and the stock market. My post that day, frozen in time, speaks a timeless message. To celebrate my 1 year anniversary of blog writing, I re-post that message in hopes it still rings true to you today, and reminds you to stay calm…stay invested.
The markets are falling! What should we do!
The coronavirus and its obvious impact on the stock market and economy will impact everyone. At this point, there is really no need to sugar coat the facts.
Every stock market correction, bear market, and recession are unique. It can be difficult to draw comparisons between very different events.
What we do know is that since 1926, stocks have averaged growth of 7% per year. Over the long-term (20+ year rolling periods), there is no history of the S&P 500 losing value. In recent history, we have faced high inflation, low inflation, deficit crisis, wars, viruses, trade war, and more. The stock market did falter during these events. However, over the long term, the stock market has continued to grow despite them. Right now, the coronavirus impact is broad. However, we have no reason to believe this will not fall in line in the history of temporary market events.
I understand that while we can learn from history, it doesn’t always make “today” feel any better. So, we must focus on what we can control.
We cannot control the stock market, the virus, or the economy. What we can control is our financial behavior. Stick to your long-term plan. Don’t make dramatic changes to your portfolio out of fear. Changes made during market volatility can and will impact you in the long term.
Construct a portfolio formulated with your long term-future in mind; my advice is to stay the course. Do not check your account balances daily. Keep contributing to your retirement accounts regularly.
If you have more specific thoughts, I am happy to address them more thoroughly in future posts!
In the meantime, stay calm, stay invested…