Given the dramatic sell off in the stock market this week resulting from concerns surrounding the potential for a coronavirus pandemic, we thought it appropriate to provide a few comments:
Unless you actually contract the coronavirus, try to stay calm.
We strongly advise against trying to get out of the stock market when it looks bad and get back in when it improves. That makes it likely that you get you out of the market just before it recovers, which is the biggest source of long-term return. Admittedly, this strategy can be nerve-wracking because staying invested may subject you to more downside. Unpleasant as it is, we all just have to live with market ups and downs or risk damaging our future prospects.
What we try to do is have you invested in a way that you can weather whatever comes. Our stocks are skewed toward companies with growing dividends, a group that tends to be somewhat more defensive, and you own many things that are not stocks. For each of our investment strategies, we have ranges within which we keep our stock allocations, and we are near the lower end of those ranges at this time.
The best way to deal with uncertainties in the market is through diversification and adherence to a well-constructed financial plan that takes disruptions like these into account. Your financial plan understands and anticipates that the market has periods like this, and in judging your chances of success, it takes this into account. Your plan is really the best measure of where you stand, and anytime you want to check in with how your prospects may have changed, having your plan updated and talking with us about the results is the best way to do so. We’re in this with you – and we’re in it for the long haul.
Here’s to your health, both physical and financial!
The Team at Old Dominion Capital Management