I Have Lost Nothing in the Stock Market Because I Am Not Selling Today
By Mitchell J. Smilowitz, CPA
The coronavirus is officially a pandemic. We’ve seen the stock market decline by more than 20%, ending the historic 11-year bull market. Sporting events, movie theaters, conferences, schools and restaurants have been closed or cancelled to slow the spread of the disease.
A few days ago one of our plan participants sent me a cartoon. Bart Simpson is standing in front of a blackboard looking back at us. He’s writing:
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
You get the idea.
It’s hard to make rational decisions when so much uncertainty surrounds us. We feel compelled to do something to take control of our fate. That’s why supermarkets run out of bathroom tissue and paper towels. Similarly, as investors, we want to do something to manage the volatility in our investment portfolios. But sometimes the best thing to do – is nothing. As long-term investors, it’s never prudent to make changes based on emotions. Remember,
- I have lost nothing in the stock market because I am not selling today.
We saw this kind of volatility in the markets during the Great Recession. By the time the Dow Jones Industrial Average reached its lowest point on March 9, 2009, it had lost 53.8%, more than half of its value. The Dow regained everything it lost within four years on route to an 11-year bull market that saw the Dow increase about 400% to reach an all-time high.
- I have lost nothing in the stock market because I am not selling today.
Many people compare the stock market to a roller coaster. The trip up is slow and steady: click, click, click. You may scream on the way down as the car rattles and careens around corners. But you only get hurt if you try to jump off. Unlike a roller coaster, however, the stock market historically ends up higher than before.
- I have lost nothing in the stock market because I am not selling today.
Remember that volatility isn’t a problem with stock investing – it’s a feature. Think of the higher long-term returns stocks have traditionally provided as compensation for tolerating stomach-churning periods of volatility such as those we are currently experiencing.
- I have lost nothing in the stock market because I am not selling today.
We will bring COVID-19 under control. The American economy remains strong. It will rebound. Once the crisis is over you can make a reasoned assessment about your portfolio. That is the time to evaluate your investment strategy and determine if you remain on course to meet your financial and retirement goals.
Right now, the most important thing is protecting your own health, the health of your families and doing what you can to ensure your communities are as safe as possible. Wash your hands. Maintain a safe “social distance.” Get tested if you exhibit symptoms. Stay home if you are sick.
And do not make any changes to your JRB account based on fear. Remember Bart Simpson.
- I have lost nothing in the stock market because I am not selling today.
As always, please remember that the JRB is here for you. Call us at 888-JRB-FREE (572-3733).
