Markets Panic, We don't

A round up of my interactions today regarding the current panic

A Facebook status I posted (I posted almost the same thing on Twitter, shortened slightly to fit);

The stock market is panicking, it does that now and then. If this grows into a serious decline, well you've been through them before and you know exactly how it ends. It stops going down at some point and then it makes a new high. If you are under 80 and healthy, this will not be your last panic/large decline.

A friend then asked a question, my response as follows;

Why do you invest (not a sarcastic question)? If it is for some long term objective then yes, keep putting in same as always, you are buying cheaper. If this 'whatever this is' ends today, most of us will forget it ever happened very quickly. I am 52 and if we need our savings I think it will be when I am about 70. There will be 2 or 3 bear markets between now and when I turn 70. The bear market that starts when I am in my 60's will start from a MUCH higher level than where we are today.

I responded to a Tweet where someone posted a poll asking if people were selling everything, trimming risk, doing nothing, adding risk. My reply;

sticking to the investment process I laid out for myself as being the best way to achieve my long term objectives

Part of an email I sent to clients;

Just wanted to check in amidst what looks like a panic in the market. Obviously we've been on the lookout for this for quite a few months now. There is no way to know what comes next but we have all been through this sort of thing before, more times than we probably remember. During the bull market that started in 2009 there have been at least four declines in the range of 10-15% and they were all similar in that they felt like they happened quickly.

To the extent we can't know yet with certainty how serious this is or isn't we do know how these end, no matter if this becomes a true bear market or not. Declines, large or otherwise, eventually stop, then the market recovers and then makes a new high. The only variable is how long that all takes. I've said that before in these emails and will say that again the next time the market panics because it is always true. It was even true during the Great Financial Crisis which was portrayed as the worst economic event since the great depression.

Depending on the time studied, the US stock market has an average annualized return that ranges from 8-10%. That 8-10% includes bear markets and other scary declines. If an investor did nothing but hold on they'd still come out just fine.

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