Coronavirus fears are not a reason to sell in this market

Last week, global markets added the word “coronavirus” to their collective vocabulary. And with that, the calm that had settled over financial markets in recent months was shattered. Emerging markets and Asian equities bore the brunt of the blast, while in the United States, concerns about the virus were evident on Wall Street on Friday, with the S&P 500 down about 1%, its worst drop since October. Markets were supposed to come back down to earth after a more than 30% rise in 2019, but the arrival of the coronavirus has added a layer of unforeseen complexity. Irrational fears can move markets sometimes violently, and that leaves investors wondering if it’s a good idea to simply hunker down and wait out the storm. So, should they? Yes, and here’s why. Based on past incidents like the SARS outbreak of 2003, the virus isn’t likely to be more than a one-time event. While specific industries will probably take a big near-term hit from these worries–think shares of airlines, casinos, and other companies with exposure to China–the coronavirus doesn’t seem to have the staying power to move markets for more than a short period. In the U.S., the S&P 500 was already

January 27, 2020 No Comments

Keep calm and buy when there’s blood in the streets

Financial markets are characterized by long cycles with many ups and downs. Successful investors block out fear and sensationalism and recognize that these market cycles are part of investing. In practically every bull market of the last 40 years, the U.S. stock market has experienced a correction during its rise. The Dow posted its worst one-day point drop in history today (though not its biggest percentage drop). It was a classic panic-selling scenario. Here’s what you should do about it: 1) Know your history Since 1900, the U.S. has seen 125 corrections of 10% or more, which averages out to about one per year. (A correction is defined as a 10% pullback, and though we haven’t reached that territory yet, we may be headed there.) Since 1980, the stock market has had positive annual returns in 28 of the last 37 years. With that perspective, if your investing time frame is years or even decades from now, it may be best to hold tight and stay invested. Of course, there’s no guarantee that durations of future recoveries will happen in a similar time, or at all. But unless you have a need for the money in the short term, it

February 5, 2018 No Comments

Seven ways to handle a market correction

Now that we stand six years removed from the Financial Crisis that preceded the current bull market in stocks, let’s understand how to react when a “correction” eventually occurs. Financial markets are characterized by long cycles with many ups and downs. The successful investor blocks out fear and sensationalism and recognizes that these market cycles are part of investing. In practically every bull market of the last 40 years, the U.S. stock market has experienced a correction during its rise. Read on for 7 ways to deal with the next one. In 2009, many investors were cashing out of the stock market. Things had been choppy for almost two years, and recent performance led them to behave as though the market was going to continue to go down. However, many of those who stayed invested saw stronger than average results over the next few years. In fact, since March 2009, the Standard & Poor’s 500 Composite Index is up more than 200%, making this the fourth-longest bull market in history. The year 2013 alone saw 45 new record highs in the S&P 500, so an upcoming correction in this current bull market may be due. What should you do? First,

April 23, 2015 No Comments