Investing in Times of Uncertainty March 2020
I’ve been getting a lot of questions about investing lately.
Should I buy? Should I sell? What should I buy? Will the market keep going lower?
Before I go into investing, I want to take a moment to reflect on how as scary as the world seems right now, we are living through a period in history that will be written about for the rest of time. This is how people feel during wars when curfews are put in place, 9/11 when everyone was terrified of flying, the 1918 influenza where 1/3 of the world's population was infected, the financial crisis of 07/08 when the market crashed etc. People are scared of leaving their homes, concerned about their loved ones, their health, their futures..
Recognize all the emotions you are feeling because your body and mind are going through some things they have never gone through before and as crazy as all this is, we are fortunate to have each other to go through this with. In times like these, peoples true colors come out, are you going to be kind in this time or are your going to be selfish? Are you going to have a positive attitude or a negative one? Help others even if no one is watching, give each other a break, check in on your friends who don’t do well in isolation (no need to check in on me, this is my introverted self's dream)
Okay let’s get into investing-
Take care of ourselves physically, take care of ourselves emotionally, and if you can, look away from the markets, they are going to continue to be volatile as this thing shakes itself out. Investing should be a long-term initiative.
Should I buy? The markets historically have trended upwards, but not without their fair share of volatility, just like they are experiencing today. Investing should be long-term. For example: If you had invested in the stock market from 1999 to 2018 (even with the crashes of 2001 & 2008), and not touched it, your money would have tripled.
Right now you can buy some stocks 25% less than what you would have gotten them at a month ago. I recommend to buy stocks in companies that make sense - Apple for example, it’s down right now, will rebound quickly, and it’s most likely not going anywhere. ETFs (exchange traded funds) can be a good investment option as well because these offer a ton of diversification and historically have had good returns. Remember ETFs are basically baskets of stocks instead of just buying one stock at a time. For example: VOO encompasses the top 500 companies in the US (S&P 500), so you are getting a little piece of 500 different companies.
Repeat after me: There is absolutely no way to time the market. If you buy now, stocks may fall another 10%+, they may not. So if you buy now, understand that you may loose a little bit before you win, but these losses are temporary and the only really loss is if you sell.
My recommendation is to add to your investment account regularly/consistently - even when markets are down. You'll end up investing during both good markets and "bad" markets and it can all average out in the end.
Should I sell? Losses that people are experiencing right now are soft losses, the market will rebound. The worst you can do for yourself at the moment is to sell.. then you really did lose the money. I would advise to not look at your investments right now unless you see them as an opportunity to buy more stocks if you have the cash.
I will offer one last solution: do nothing. If you don't feel comfortable buying, don't. If you are feeling like you want to sell, stop looking at the markets for a few weeks and do nothing. The market will come back and when you are comfortable again you can get back in. There is no point in stressing yourself out further with everything going on.