We are living in a strange time. No matter how you slice it, dealing with a pandemic is difficult. People are working remotely, staying home, and trying to navigate this new normal. There have been quite a few pandemics in our history. From smallpox to measles to cholera and so many others, market fluctuations are inevitable when it comes to the fallout of a pandemic.
Falling into the trap of hysteria is easy to do while watching the news and reading friends’ opinions on social media. However, history has taught us that for every seemingly long economic recession has come an even longer economic expansion. In fact, while the average length of an economic recession is 15 months, the average length of an economic expansion is 48 months.
So, what can we take away from this information? How should we ease our fears and concerns during this time of uncertainty? How do we navigate the bear markets and the subsequent bull runs? Does it make sense to time the market? These are common questions and they deserve answers.
You are likely having one of three reactions to the crisis and bear market:
- Response 1: I’m worried about what’s happening and how it affects me and the people I love. When will things go back to normal?
- Response 2: Things are crazy right now, but this is a once-in-a-blue-moon opportunity and I don’t want to miss out. Point me to the bargains!
- Response 3: I’m concerned about the virus and the economy, but I want to leverage the market opportunity as much as I can. What should I be doing?
Turning to investing greats like Warren Buffett, who said, “Be fearful when others are greedy. Be greedy when others are fearful”, we can learn a lot. Keep these general tips in mind while reacting to COVID-19 market fluctuations:
- Weather the storm with a diversified portfolio
- Keep your emotions in check
- Disregard forecasts
- Do not try to time the market
- Be patient and think long-term
- A market correction is an opportunity
- Markets fluctuate, so stay the course
These concepts may make perfect sense to you, or maybe they seem irrational. The reality is that the savvy investor understands the inherent nature of fluctuation in the market. The foolish investor panics and reacts accordingly. Building wealth means navigating unclear times with clear-cut action, even if that means clear-cut inaction.
Recessions have happened over and over again in the past and they will continue to come and go. But when it comes to market fluctuations, what goes down, must come up. A recovery is on the horizon, it always is. Now, it is one thing to know this to be true and it is another to accept that truth. Try to remember that humans are remarkably resilient. This is not the first time we have conquered a pandemic or economic threat. It will not be the last, either.
Part of the ability to navigate these market fluctuations lies in turning to the experts. At Baron Silver Stevens Financial Advisors, LLC, we pride ourselves on being there for our clients at all times. From recessions to major growth, we are here as a guiding light to investment opportunity and financial health. Call us today to learn more about your options during the pandemic and beyond.