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Educational Resources

By Joanne M. Welker, CFA, Senior Vice President and Manager, Advisory Services

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The equity market is down big today based on concerns of the coronavirus and its impact on supply of goods. Amazon is worried about Prime Day – i.e. Grappling with coronavirus outbreak, they are already taking steps to avoid supply-chain disruptions in China. While it can be seen how this would cause a reaction in the market, we must also remember that this truly is a “first world problem” type scenario – Worry about meeting the supply of a made up event where people are searching for deals on non- essentials is not quite the same as supply concerns for necessities of everyday life. The silver lining here is that stocks are “on sale.” As Warren Buffet has said “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” If you have had cash on the sidelines, days like today can be a great time to get invested. Additionally, have you not been trimming or selling a security you really know you should, because you didn’t want to pay the capital gains tax? The market may have taken some of that tax out of the equation for you. Aside from the above possible actions, the other important thing to remember on days like today is you don’t have to do anything. There’s this thing called “action bias” where doing something makes you feel better, but in reality, it may be the exact wrong time and thing to do. Remember you and your Advisor have developed a strategy for your investments. The market is volatile and has corrections, but the swings witnessed in this current environment should not change your long-term approach. Call your advisor to discuss any concerns; but resist the need to act just for the purpose of doing something.

February 24, 2020 |