Danger. Pain. Threat. Alarm.
Fear isn’t rational. It’s an emotional trigger. That doesn’t mean it can be avoided. But you don’t have to give it the space needed to elbow out logic.
Yes the sky is falling. But only so far. We have already experienced what is technically considered a correction – when the market retreats by at least 10 percent.
But let’s reset. The major stock markets advanced more than 20 percent last year alone. So we’re still 10 percent above where we were a year ago.
I’m not going to go on about how corrections are a regular part of the cycle or talk about fundamentals, or the spur of lowered interest rates. All of that is relevant but it doesn’t talk to the fear.
This isn’t only an economic fear – it’s an anxiety epidemic caused by a very real pandemic. That’s why I feel this fear is misplaced or exaggerated. If I was seeing a host of danger signs in the economy, I’d be looking for a soft landing. But we believe this crisis will be short-lived. Unlike other economic threats, this one will end quickly.
Would you be surprised to learn that stocks absorbed a harder pounding during SARS than they are today from the coronavirus?
We believe stocks are already testing their lows. In fact, one of our colleagues determined that last Friday was the bottom and bought into the market – just before enjoying the biggest single-day advance in history.
It all depends on your perspective – glass half empty or half full?
What we’re dealing with here is emotion. You see panic in people’s reactions to this health scare. And you see panic in people’s reactions to the market correction.
If you wonder what Barbara and I are doing with our own investments during this time of uncertainty, take note: we’re sitting tight, with the confidence that markets will calm themselves as fears subside.
In the meantime, we need to all take a collective deep breath.
Thanks for reading. I hope this helps you find some peace of mind.
Feel free to share this perspective. Hopefully it’ll strike a chord.
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