March 17, 2020 | By fischer |
Not long ago, some investors had yet to experience what it was like to weather turbulent markets. Even those who had, might have forgotten how scary it can be. This concerned us.
Well, guess what? In case you haven’t noticed, scary days have arrived, thanks to the concern over how coronavirus might impact our global economy. As we draft this update, headlines are reporting the biggest weekly stock market losses since 2008.
As usual, we won’t predict whether the current correction will deepen or soon dissipate. But what was good advice in mild markets remains even better advice today.
Of course, we continue to advise against trying to react to an unknowable future. But we also are aggressively looking for ways we might be able to help clients make lemonade out of this week’s lemons – such as through disciplined portfolio rebalancing or opportune tax-loss harvesting.
If we can be of assistance in any way, we hope you’ll be in touch. In the meantime, here are 10 things one can do right now while markets are at least temporarily tanking.
1. Don’t panic (or pretend not to). It’s easy to believe you’re immune from panic when the financial sun is shining, but it’s hard to avoid indulging in it during a crisis. If you’re entertaining seemingly logical excuses to bail out during a steep or sustained market downturn, remember: It’s highly likely your behavioral biases are doing the talking. Even if you only pretend to be calm, that’s fine, as long as it prevents you from acting on your fears.
2. Redirect your energy. No matter how logical it may be for someone to sit on their hands during market downturns, the “fight or flight” instincts can trick one into acting anyway. Fortunately, the