“State of fear” is the title of a book I read a long time ago, but it is also a way to describe the current state of the investment markets. Right now, the prevailing mindsets seem to be shoot-first-ask-questions later and this-time-it’s-really different.
It is our intent with these increasingly frequent emails about the market not to keep you in a state of fear, but to provide a less impassioned view and keep you invested. For all of investing history, it has been safe to say “this too shall pass.” We have no reason to believe this time is different, although the exact facts are different.
What are those facts?
As I type this, the Dow Jones Industrial Average is down by 1,250 points, well off its lows of the day. A combination of factors conspired to produce that. Those factors probably include COVID-19 and machinations in oil markets over the weekend. One thing we can say for sure is that investors are fearful, and the easiest way to reduce fear is to get rid of the thing that’s causing it, which today is stocks.
At the risk of sharing viewpoints we might not entirely agree with or at the risk of pointing out how smart other people are, I suggest you check out this blog post from The Big Picture, by Barry Ritholz. I like it, in part because it references a great book, The Hitchhikers Guide to the Galaxy, but mostly because it gives good advice, seen in this excerpt.
“Don’t Panic” is the best advice I have ever been given; it is applicable in every situation I am familiar with, whether Vogons are about to demolish your planet or when the S&P futures market are set to open lock limit down. Panic does not make anything better and often makes things worse — occasionally much worse.