It goes without saying that Spring 2020 has been quite challenging for most individual investors. The economy looks as if it will contract at historic levels, which follows the end of an 11-year bull market sending the S&P 500, a benchmark for the broad stock market, down almost 34%.
What did you do? Did you panic?
Many did and it is tough to fault them. If it wasn’t because of their health, it was because of their wallets. If you panicked and left the stock market, you would have locked in losses and missed out on the 28.5% rally that took place from March 23-April 17. There is a lesson to be learned from this.
The stock market can change in an instant and confidence can erode quickly. But, it can quickly emerge as well. It is inherently dynamic and tends to forward look on what the expectations are on the overall business environment and economy, not so much on what is happening right now.
In tough times, it’s important to step back and realize that despite the short-term volatility, stocks may continue to play a role in your long-term investment portfolio and overall goals. It is perfectly acceptable to consider, worry about, and react to the moment. Just remember, the current moment is not the future, and the future can turn out better than you expect.
If you have a question about your current situation, I encourage you to reach out. I’d be happy to help.
Fun Fact: If you drive south from Detroit, you'll hit Canada.