As the market digests the quickly developing information related to the coronavirus disease, we will likely continue to see volatility in the stock and bond markets. The markets are doing exactly what they should be doing which is calculating the *possible* economic impact of the disease. While the markets are busy doing their job, it's time for us to do ours.
My job as your advisor is to make sure that your portfolio's risk level matches your risk tolerance. That job is part of our ongoing planning process and is done before the market drops. My job is also to, as Rahm Emanuel succinctly once put it (and I'm paraphrasing), “never let a crisis go to waste because it's an opportunity to do things you could not do before”. If the markets continue to fall, I'll look for opportunities to rebalance your account. And if you've been keeping cash on the sideline waiting for an opportunity like this, then you should expect to hear from me when the time is right. Your initial job as a long-term investor at the onset of any market turbulence is, quite simply, to do nothing. I know that can sometimes be a hard decision but it is the right decision.
One of my favorite authors, Tim Ferriss, recently wrote about making one decision that eliminates 100 decisions. Ferriss used it to decide how to prioritize which books he would read this year. We can use it to become better investors. Let's make our one decision not to do anything right now. With that one decision, we will eliminate so many other decisions of which are undoubtedly causing some of us stress. For example: should we go to cash? Should we buy gold? Should we sell XYZ fund or ZYX stock? All of these decisions are eliminated with the decision not to do anything right now.
As always, I am here to talk, answer your questions, calm your nerves, and help you find the opportunities in this and any market. Please do not hesitate to call or write anytime.
Breakwater Financial, LLC is a registered investment advisor. The content of this blog post is for informational and educational purposes only and is not to be considered investment, legal or tax advice. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. If you have any questions regarding this blog post, please contact us.