Markets Panic Every So Often, It's What They Do

rogernusbaum

The market is in the middle of a panic over what appears to be the potential threat from the Coronavirus, having dropped 5%+ in a couple of days. Since I have been blogging in 2004, there have been countless short lived market panics, more than the typical person can remember. During the bull market that started in 2009 there have been countless short lived market panics, more than the typical person can remember. If you have been involved with markets since before 2004 then you have endured countless short lived market panics, more than you can remember.

In terms of market manifestations, there is nothing new here. The details might be different, at least a little, but the market behavior is the same. If that is the case, and it is, then that means there is no reason to deviate from whatever investment process you chose for yourself as being best for you, when emotions weren't muddying the waters. I am not saying don't sell, I don't know what your process is, I am saying stick to your process.

For a little context, the S&P 500 is where it was in early December. Sure, it would be nice if it was back where it was last Wednesday but it's not and that is ok. Actually, for people who are in the accumulation phase, then their next 401k contribution will likely be at lower prices. That might be short term-uncomfortable but it is clearly long term-beneficial. The Great Financial Crisis started when the S&P 500 was around 1500. If this is the next big one (to be clear, I have no idea), it started when the S&P 500 was at 3300. The one after this one will start from a level much higher than 3300. Keep that in mind as a huge reason to stick to whatever your investment process is.

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