I recently wrote a note to clients with some thoughts on the current market crisis. Here are the highlights:
- The current market environment is similar to 2008 in many ways– only in “fast forward”.
- Markets hated the uncertainty of toxic derivatives in 2008 and they hate the uncertainty of CoronaVirus today.
- The thing to remember about 2008/2009 was that it ended. It was not fun. It was often scary and uncomfortable. But it ended and stocks eventually recovered. Companies continued to do what they do best – create value for shareholders.
- It’s important to remember that they did not ring a bell at the bottom in March 2009. No single event marked the low. Stocks simply stopped selling and started going up. Even though the headlines were still bad – even though it would be years before all the casualties were counted.
- I have met many people over the years who shared with me that they sold out of their 401(k) or IRA or retirement savings during the 2008/2009 crisis and never got back in. The pain was too much to take and they needed to sell to stop the pain.
- Your portfolio should be designed to withstand market dislocations like this one so that you do not make the same mistake.
- Your asset allocation should be based on your age, financial goals, and general risk tolerance among other things.
- If you take the time to get your asset allocation correct before the markets start to panic, then you can stick with your portfolio when panic sets in.
- We are now in one of those times. Investors are panicking. Large financial institutions and hedge funds are getting margin calls which leads to forced liquidation of all securities. We are in a storm but we do not know when the storm will end.
- I believe that now is the time to avoid mistakes.
- I believe that future returns will be very good for those that can keep their composure during this crisis.
- Most importantly: I believe that this, too, shall pass.
**The above article is informational in nature only and is not a recommendation to buy or sell securities. All information is gathered from sources believed to be reliable, but neither Charles Brown nor Ausdal Financial Partners, Inc guarantees the accuracy of the information. All investments carry a degree of risk. Individuals should consult with their tax and investment professionals before making changes to their investment portfolios.
***Securities and Investment Advisory services offered through Ausdal Financial Partners, Inc, 5187 Utica Ridge Road, Davenport, IA 52807 (563)326-2064. Member: FINRA/SIPC. M.Brown and Associates / M. Brown Financial Advisors and Ausdal Financial Partners are independently owned and operated.