Investment Commentary/Update: The Corona Virus – What to do?
We’ve comprised a suggested list of “Dos & Don’ts” that you might find helpful during times when equity markets are temporarily out of favor with investors.
Do review your holdings and make sure you have sufficient near-term liquidity, perhaps 180 days. This way you are not forced to liquidate great companies at falling prices.
Do feel comfortable that your AGCA Team is constantly monitoring our clients’ portfolios, and is proactively taking steps to protect gains and provide liquidity, not only for current needs, but future opportunities as well.
Do know that these types of situations can generally impact investors for a period of 6 months or so. Also, be aware that the Department of Health & Human Services and the CDC have taken extraordinary safety measures to assure the safety of the American Public.
Do be aware that the stock market was trading at what may have been unrealistic multiples before the virus. The indices were prognosticating double digit growth next year. This is not realistic in a period when global growth is slowing. Therefore, the Coronavirus, among other factors, could be just the right catalyst that drives the equity markets to pullback 10-15%. Ultimately, there really is no way to get around this function of free markets.
Do stay informed, but no need to watch 365, 24/7 news. Remember, they have an ulterior motive to sensationalize for ratings.
Don’t panic. Nothing will change for the better if this is our demeanor. Now is the time when we help you make level headed, premeditated, and conscious decisions. Don’t join the indiscriminate selling, protect liquidity and profits if need be, but rest assured that there will be opportunities to invest any excess cash. If history after SARS, the Swine Flu, and other similar viruses have taught us anything, it’s that buy-and-hold does eventually persevere.
Don’t listen to people who say, “it’s different this time.” I have never seen that to be the case. Don’t imagine that this is definitely going to make us all die, impact all earnings, and wipe out GDP. It won’t. Remember, the CDC and the United States have restrictions in place to protect us.
Don’t allow yourself to be consumed by the never-ending news cycle. Stay informed, take appropriate precautions, and go about your normal routine. The market will sort itself out in time.
Don’t be fooled. While the market’s recent volatility is disconcerting to say the least, we’ve learned from past experiences that investors who remain disciplined have enjoyed very healthy growth after these types of “corrections.”
Don’t believe that there is nothing that can be done to help. Federal Agencies remain poised to act should it become necessary, and let’s not forget good old-fashioned ingenuity. Many people around the world are working very hard to combat the virus, and have made unprecedented progress.
Be wise, be calm, and call us with any concerns or questions.