Markets are panicked right now, and it can feel like uncertainty is here to stay. It felt like this during the financial crisis of 2007-08, the .com bust in 2000, and in the wake of 9/11 in 2001. But if history is any guide, the country and the economy have repeatedly recovered from moments of peak uncertainty and returned to growth.
What we are seeing now in the markets is largely a product of uncertainty. Markets hate uncertainly and tend to overreact to events that we have not experienced before. The coronavirus is something we have not seen before, at least in this global environment in which we now live. But, remember that long-term investing remains the most effective strategy to build wealth over time. We’ve seen the country and the economy bounce back before, and that’s why we’re in this for the long haul.
There are so many unknowns in the economy, so we urge you to ignore those providing economic forecasts. No one knows for certain what the economic environment will look like when this crisis has passed. What we do know is that before the pandemic, the economy was progressing with healthy fundamentals. Obviously, those fundamentals are being challenged right now, and the shock is creating an economic downturn. Policymakers are working to throw more liquidity into this economic valley and create a liquidity cushion through fiscal and monetary policy. When that plan finally passes through congress, the bail out should help in the economic recovery.
In the meantime, we are telling all our clients to stay the course and do not give into panic selling. History has proven that markets recover, but realized losses are much harder to recoup. Those that miss the 10 best days of the market always end up worse off than those that hold their positions. There is a high probability that if you sell you will miss some of the best days moving forward. We at Infinity Wealth Management are providing the discipline needed for long term investing and your success will be measured by how we behave when times are bad.
Stay healthy and safe and please reach out if you have any concerns or fears with respect to the financial assets you have entrusted to IWM
~ By Mel Tewahade, CEO, Infinity Wealth Management, Inc. 9101 East Kenyon Ave, Denver, (303)337-7082 / www.infinitywealth.net / www.infrs.com