An echo is a slightly delayed, slightly distorted, repeat. In a canyon, we yell, there’s a pause, and we hear ourselves yell back but it sounds a bit different than the original message. That’s part of what we’ve been seeing in the market.
When the pandemic started to become visible here in the West, the markets (along with governments, news outlets, social media, etc.) started to take notice and report on it. The market reported with some instability, the media with sensationalism, the government with carefully worded statements, and social media with everything from “thoughts and prayers” to outlandish conspiracy.
Sharing mass experiences – like a pandemic – can cause our concerns to be amplified. It’s been said that fear and greed are the two emotions of the market, but that’s not accurate. Worry, anxiety, hope, desperation, optimism, trust and a litany of other emotions show themselves too.
We know the past; the virus hit, fear took over and the stock market dropped. But a question in front of many investors is, “What should I be doing now? What should I be doing next?” A new fear is arriving: the Fear Of Missing Out.
When the market dropped recently, that made sense. What didn’t make sense was the way the large cap stocks snapped back so quickly. Some investors have a feeling of disbelief. Others are seeing optimism and are hoping that the bottom has happened, and things are creeping up.
So, let’s speak plainly about the question of, “What should I be doing now?”
First, you should be sticking to your Financial Plan. If you don’t have a Financial Plan, you should be calling us right now and getting one. This is not the time to be day-trading your way to success. This is the time to clarify exactly what it is that matters to you, and how you’re going to get there in a thoughtful, calculated fashion.
Should you be “going all in” and investing heavily in stocks right now? The behavior we’ve witnessed over the last few months is unprecedented. That doesn’t mean “amazing” or “confusing” or “newsworthy.” It means that it is literally without precedent. It has not been seen before and that points to the notion that no one knows what’s coming next either. Therefore, this may not be the time to make big bets.
It may make sense, based on your Financial Plan, to participate lightly while we all witness what happens next and what is an appropriate response. But be cautious, no one has been swimming in this pond before, and it’s hard to know what to expect.
Here’s what we think is most important…
Do not let your emotions sway your investing decisions; let your plan do that. The purpose of a plan is to confront reality, recognize a desired future, and map the course toward it. Did anyone expect a pandemic to be on your path? No. Do financial plans account for variances, even significant ones like our current situation? Yes.
The only Fear Of Missing Out you should have is missing out on having a financial plan in place. That’s something we’d be afraid of.