If you are looking for reasons to be worried, there are plenty of headlines to light the fuse. Frankly, I believe scary is a perfect word to describe what is going on, but periodic crises are inevitable and recovery always follows. As we know, fears about the coronavirus have driven stock prices considerably lower indicative of the Dow Jones Industrial Average, with a whopping 3,583-point drop last week, which proved to be the worst week since 2008.
Although, it might be hard for many to believe how quickly the market has declined in such a short period, it does not surprise me in the least. Candidly speaking, I suggest last year’s incredible performance for the stock market put a lot of us in a state of complacency. Therefore, this corrections (usually defined as 10% pullback) are a just a normal part of investing regardless of the severity. Regardless of the common place of corrections, they are intended to scare the snot out of us and this one is arguably doing just that. However, one thing about market corrections is they eventually stop. The problem, of course, is figuring out when. When we witness a downturn in stocks, it reminds most of us just how emotionally difficult successful investing is, especially in a 24-hour-news-cycle environment. It is challenging even for the most disciplined investor to patiently wait for long-term results when his or her portfolio is being pummeled. Therefore, I understand the temptation to believe in doom and gloom, especially since the trauma of 2008 caused many to succumb to post-traumatic stress disorder.
I am writing this narrative, on Monday March 2, at the close of trading with the Dow roaring back from the Coronavirus sell-off with its largest gain since 2009 advancing over just shy of 1294 points or 5.1%!
Of course, nobody can say with certainty that we hit a bottom last Friday and that today is a sigh of relief and the beginning of a recovery higher. My cloudy crystal ball is telling me that the pain is not enough for a bottom, which, to me, suggests that we have more downside in stock prices. But then again, what do I know; I am just a financial advisor.
However, there is one thing that I do know with incredibly high certainty and that is those of us who can control our fear are arguably the ones who will not become one of the many Wall Street casualties.
Let’s all keep the faith that we will soon win the battle over the coronavirus, which should put our economy back on sound footing and push the stock market higher.
Harry Pappas Jr. CFP®
Master of Science Degree Personal Financial Planning
Certified Estate & Trust Specialist ™
Certified Divorce Financial Analyst™
Pappas Wealth Management Group of Wells Fargo Advisors
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