Across America we’re working from home, schooling children from home, and dealing with increasing levels of lockdown. It’s a bit of a rough patch and for those who are passionate about March Madness…. we understand your pain!
Everyone is concerned about the spread of the Coronavirus. I tend to stay away from the term “crisis”; however, this truly is a health crisis. We’ve spoken to many of you over these past few weeks and want to address the three most common reactions:
Reaction 1: “I’m worried about what’s happening and how it affects me and the people I love. When will things go back to normal?
Too soon to tell. Like most of you, I have been working from home and only leave when necessary. I’m in constant communication with my very smart team and thanks to technology, do not feel as if we’re missing a beat. I appreciate the big windows in my home office and see beautiful trees and people taking walks (6’ apart of course!). Good things do come out of bad. It’s inspiring to see people pulling together and helping their families, friends and their communities.
Reaction 2: Things are crazy right now, but this is a once-in-a-blue-moon opportunity and I don’t want to miss out. Point me to the bargains!
Our golden rule is to buy good stuff and determine how much cash you should stash. It’s difficult to buy when the market looks ugly and hard to sell when it’s on a roll. Our stance is to buy quality investments on down days and hold on. For a layer of caution, you can buy in two or three transactions, in case your favored company’s value falls below your initial purchase price. No one can pick a bottom. This process takes discipline but over time you’ll end up better. I often think of Warren Buffet’s Quote “Be fearful when others are greedy. Be greedy when others are fearful.”
Reaction 3: I’m concerned about the virus and the economy, but I want to leverage the market opportunity as much as I can. What should I be doing?
Stay with the plan that was carefully crafted for you. No one knows what’s next, but markets will go up and down. We do know that moves are happening faster and with greater volatility. The best thing you can do is stick to your plan and keep your emotions in check.
My advice for weathering this crisis is the same as no crisis.
Here’s the advice I give and use myself on weathering the stock market and the guest appearance a crisis will make every now and again:
Be patient. There’s too much uncertainty around the virus response to make predictions about the market bottom. The coronavirus crisis and market volatility are likely to persist for months.
Be strategic: Buying opportunities like we’re seeing don’t come along very often. We’re watching for bargains and will reach out as needed. Before investing determine how much cash you need to keep in savings.
Be safe and focus on what’s within your control: Let’s trust the medical experts and avoid crowds, stay home as much as possible, and wash our hands even more.
Use this opportunity: Some are having a harder time with our current reality than others, but let’s use it to grow closer to our loved ones, learn new skills, and reconnect with ourselves. Let’s come out of this stronger than before.
All indicators pointed to a sharp contraction in 2020. However, I reserve my opinion of how the year will go until December 31st.
I hope that you and everyone is safe, healthy (physically and mentally), and as happy as they can be right now.
Moonstone Asset Management
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Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.