I made the mistake of looking at my investments today.
I’m 33. I’m lucky. I’ll have plenty of time to recover and realistically, probably come out ahead. What about the people who are retired or are on the verge of retirement? Everything looked wonderful until a few months ago.
In sudden changes in the market, the natural instinct is to turn all your investments to cash and “stuff it under the mattress.” But the data tells us that acting on impulse and fear is the exact opposite of a good course of action.
So what do you do? What is the right plan of action?
Disclaimer – I’m not an investment professional. This article is not a market report or investment advice, nor am I recommending any stocks, products, funds, or bonds.
Vanguard CEO Gets In Front of the Crisis
I’ve always been an admirer of Vanguard.
Tim Buckley, Vanguards CEO and Greg David, Vanguards CIO, released a helpful and informative video reassuring their customers that there is light at the end of the tunnel. This leadership and “honest assessment” from the company executives will play a large contribution to reassuring investors away from panic.
Tim Buckley advises investors to “stay the course.”
“The Vanguard Group is an American registered investment advisor based in Malvern, Pennsylvania with over $5.3 trillion in assets under management. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock’s iShares.”
Clearly, the market needs leadership now more than ever. Unfortunately, the market hasn’t responded well to the leadership of our president.
What About Those on the Verge of Retirement?
No easy answers here. Those on the verge of retirement are certainly experiencing challenging times.
- Stay the course – Buying high and selling low is the biggest mistake individual investors make. It may look bad now, but it will look worse if you sell at the trough and only buy back in when the market is up 10-20%.
- Don’t look at your account balance too often – Evidence suggests that people who are open-minded and have neurotic traits are especially vulnerable.
- Don’t add more years to your mortgage if you are refinancing – You want to make sure you are never in a situation where you have to sell stocks to pay a mortgage when you or a family member loses a job, hours, or gig in a recession.
Where are the Opportunities?
It’s tough to say. It’s too early.
Clearly there will be some markets that will thrive under these circumstances. I thought Fred Wilson wrote a great post about the correlations of market meltdowns and what the expectations of certain markets will be. Especially when it pertains to cryptocurrency.
Speaking of Crypto
At first glance, it looked like crypto wasn’t going to survive the corona downturn. This would have been particularly harmful to the crypto brand considering crypto was pitched as a currency that could unite the world in times of crisis.
But crypto may be turning a corner.
“Coinbase saw record site traffic and a massive surge in 24-hour trading volume during last week’s coronavirus-driven market swings, CEO Brian Armstrong said in a statement shared with CoinDesk. “Coindesk.com
Could coronavirus be the catalyst to bring digital currency into the mainstream?
Time will tell.