Are stock market swings a cause for concern? Should I buy or sell securities during this time or do nothing?
Well, a simple answer is - there’s no simple answer.
We’ve always had periods of economic uncertainty, anxiety, you name it. If you’ve been around for a few years, you’ve lived through some amazing times. The year 2020 is a perfect example of why we encourage our clients not to make emotional decisions during times of extreme uncertainty.
2020 was like no other we have ever experienced, so far. Think back to the January-February period of that first quarter. We were in the midst of one of the most robust, vibrant economies that we have ever seen in the United States and over much of the globe. We were doing very well in almost every economic category. In fact, there was a shortage of people to hire for the jobs that were available out there. Move forward to the end of the first quarter. Due to the overwhelming concern with the COVID-19 viral outbreak, which touched every part of the globe, we basically did the best we could to protect ourselves. We literally shut down our economy, which was extremely hard to do, and just left the essential businesses open. The markets, in turn, nosedived. One of the shortest, most rapid downturns ever in the marketplace we had experienced. By the end of March, there was no end in sight. Moving forward another 90 days through the end of June, the second quarter, due to some encouraging news at the time, about the COVID virus and some encouraging long-term economic news, the markets experienced one of the most rapid “comebacks” that we’ve ever seen historically.
My main point is - in times of uncertainty, as your advisor at Summit, we try to position your model portfolios of investments to cushion as best we can against these wild swings in the market - because we always know there’s going to be something down the road. During times like those, the one thing we don’t want to do is try to make quick decisions to get in and out of the market. The investors who lose over the long term are those who let their emotions take over, do not get proper guidance, make those bad decisions that they pay for later, as far as lost returns, and just a lot of fear and angst that you just don’t need as an investor.
If you have any questions about uncertainty in the market, you’re always free to contact us, and we’ll talk a little more in depth about your particular situation.