{"id":8550,"date":"2020-03-16T15:31:32","date_gmt":"2020-03-16T15:31:32","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8550"},"modified":"2022-02-26T13:06:44","modified_gmt":"2022-02-26T13:06:44","slug":"dont-panic-ask-yourself-these-questions-instead","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/dont-panic-ask-yourself-these-questions-instead\/","title":{"rendered":"Don&#8217;t Panic\u2014Ask Yourself These Questions Instead"},"content":{"rendered":"\n<p>Frantic, non-stop negative headlines make it seem like the\napocalypse is not only coming\u2026<em>but that\nit\u2019s already here. <\/em>I can assure you, it is not. <\/p>\n\n\n\n<p>Monday\u2019s trading action across the equity, bond, and\ncommodities markets sent shockwaves around the world. The S&amp;P 500 fell\n-7.6% in a single trading session \u2013 the biggest decline since 2008 \u2013 and oil\nprices notched their biggest one-day drop since the start of the Gulf War in\n1991. Stocks posted a strong rebound on Wednesday only to dive -9.51% on\nThursday. The&nbsp;yield on the benchmark US 10-year\nTreasury&nbsp;briefly touched an all-time low of 0.318% in overnight trading early\nin the week, though it settled higher later in the week. The 10-year was above\n1.5% as recently as mid-February.<sup>1<\/sup><\/p>\n\n\n\n<p>Even as I write this weekly column, I\nhave no idea how the markets will trade hour by hour or day by day, but these\nshort-term trends have never been a focus or affected my long-term investing\napproach. The heart of the matter is that the day-to-day volatility is just that\n\u2013 <em>volatility<\/em>. In my view, volatility\nis just day-to-day noise, driven by technicals, that rarely have to do with\nfundamental investing themes. I don\u2019t think this time is any different. <\/p>\n\n\n\n<p><em>My advice has always been \u2013 and\ncontinues to be \u2013 to tune out the noise, look beyond the headlines, and stay\nthe course when others flee. The markets can be volatile, it\u2019s par for the\ncourse. In my opinion, investing with discipline, maintaining perspective, and\nremaining calm in times of distress are the keys to long-term investing\nsuccess.&nbsp;<\/em><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_3_16&amp;content=stock_market_outlook_report\">You Can\u2019t Time the Market, but You Can Stick to the Data<\/a><\/strong><br><\/p>\n\n\n\n<p>Fear, along with media hysteria, causes investors to make knee-jerk\nresponses not based on data and fundamentals but on emotion. Instead, I\nrecommend staying calm and focusing on the fundamentals. To help you do this, I\nam offering all readers our just-released Stock Market Outlook report. This report\ncontains some of our key forecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>How could coronavirus impact the markets?<\/em><\/li><li><em>The ins and outs of unemployment<\/em><\/li><li><em>What of US GDP growth?<\/em><\/li><li><em>Inside the coronavirus impact on oil prices <\/em><\/li><li><em>US returns expectations for 2020<\/em><\/li><li><em>Is it time to buy U.S. stocks in early March?&nbsp; <\/em><\/li><li><em>What produces 2020 optimism?&nbsp; <\/em><\/li><li><em>And much more.&nbsp;<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0<br> <br><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_3_16&amp;content=stock_market_outlook_report\">IT&#8217;S FREE. Download the Just-Released April 2020 Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_3_16&amp;content=stock_market_outlook_report\">1<\/a><\/sup><\/strong><\/p>\n\n\n\n<p>______________________________________________________________________<\/p>\n\n\n\n<p>The market has always experienced panics, like the oil\ncrisis in 1979, Black Monday in 1987, the Asian Crisis of 1998, the Dot-Com\ncrash of 2000, and most recently the financial crisis of 2008. Many readers may\nremember Black Monday, when the Dow Jones fell -22.6% in a single day!<sup>3<\/sup>\nPeople were convinced it was the end of the stock market and that an economic\ndepression was nigh.<\/p>\n\n\n\n<p>But it wasn\u2019t the end, and there was no depression. In fact,\nthe market <em>finished positive<\/em> in 1987,\nand it wasn\u2019t long before the 1990\u2019s boom ushered in some of the best returns\nfor stocks, <strong>ever<\/strong>. The key investors\ncan learn from this event is not to give in to the fear that frequently\nblankets the equity markets. This fear \u2013 and the media hysteria that almost\nalways accompanies it \u2013 causes investors to make investment decisions based not\non data and fundamentals, but on emotion and technical trading.<\/p>\n\n\n\n<p><strong><em>Fear leads to short-term market timing decisions, which I\u2019ve learned\nover and over is the surest way to damage long-term returns. <\/em><\/strong><\/p>\n\n\n\n<p>My point here is that I\u2019ve seen my fair share of panics and\nsharp selloffs and even virus outbreaks over the years and decades. In my early\ndays, I would wonder if the market and the economy could really withstand some\nof these shocks, or if maybe it would be better to play it safe and wait on the\nsidelines for bluer skies. In my later years (these days), I can look at what\u2019s\nhappening and remember that the market and economy recovered <em>every single time<\/em>, oftentimes more\nquickly\u2014and strongly\u2014than anyone expected. I can remember that the best\ninvestment decision was often to do nothing at all, assuming I had already used\na rigorous and time-tested process to build and manage a diversified portfolio\nwith quality companies. That\u2019s why I feel confident right now, not\nfearful.&nbsp;&nbsp; <\/p>\n\n\n\n<p>So, instead of panicking and falling in line with\ndoom-and-gloom scenarios and predictions, I think investors should take a deep\nbreath and ask some questions: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>By summer and fall, will everyone still be\ntalking about the coronavirus outbreak and an oil price war between the Saudis\nand Russia? Or are these just two events in a passing moment in time?<\/li><li>Are record low interest rates good for the\neconomy or bad for the economy?<\/li><li>Would lower energy prices be good for US\nconsumers and the economy or bad for US consumers and the economy?<\/li><li>Before the coronavirus outbreak, was the US on a\nsolid growth path with modest inflation and strong job growth? Can the US\neconomy recover from the current supply disruption and get back to growth?<\/li><li>Are US banks in strong financial positions with\nsteady loan activity and cash-rich balance sheets?<\/li><li>When the \u2018dust settles\u2019 on the current crisis,\nare we going to be left with record-low mortgage rates, interest rates, low\nenergy prices, job growth, and attractively-priced stocks?<\/li><li>Has the global economy recovered from previous\nvirus outbreaks and pandemics?<\/li><li>Has the global stock market recovered from\nprevious virus outbreaks and pandemics?<\/li><li>Have you or anyone you know lost their job\nbecause of the coronavirus outbreak?<\/li><\/ul>\n\n\n\n<p>Answering these questions won\u2019t tell us when downside market\nvolatility will end \u2013 only that it will end, in my view. Fear and panic need to\nbe ignored as much as humanly possible in order to invest successfully.\nContinue to focus on the long-term, and I think you\u2019ll have a much higher\nchance of realizing the long-term investment outcomes you desire.<\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors <\/strong><\/p>\n\n\n\n<p>In early February, I wrote a column titled, \u201c4 Reasons\nMarkets Will be Volatile This Year.\u201d Here\u2019s an excerpt:<\/p>\n\n\n\n<p><em>\u201cI think volatility is\na good thing \u2013 it\u2019s a normal, natural part of equity investing, and\nexperiencing volatility from time to time means the market is functioning\nrationally, in my view. It is also important for investors to remember that\nvolatility works both ways \u2013 delivering blows to the downside and triumphs to\nthe upside over short periods of time.<\/em><\/p>\n\n\n\n<p><em>When volatility\nhappens, I think it\u2019s almost always best to stay patient and let the volatility\nrun its course. My advice in 2020 will almost certainly be no different.\u201d<\/em><\/p>\n\n\n\n<p>Volatility \u2013 <strong>and my\nadvice to stay patient<\/strong> \u2013 is here now. I had no idea that volatility would\naccompany a virus outbreak and an oil price standoff, but my decades of\nexperience taught me that it was only a matter of time before <em>something <\/em>happened to trigger wild\nswings in the market. The triggering event is almost always unexpected and\nunpredictable, and I suspect this current bout of volatility will last weeks or\neven months. <\/p>\n\n\n\n<p>With each passing year of investment experience, it is\neasier to see why the four most dangerous words in investing are \u201cit\u2019s\ndifferent this time.\u201d If you\u2019ve ever believed \u2018this time is different,\u2019 history\nhas always proven you wrong. Keep a cool head, and I think you\u2019ll be right.<\/p>\n\n\n\n<p>To help you stay calm and focused on the fundamentals instead of the media hysteria, I am offering all readers our<a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_3_16&amp;content=stock_market_outlook_report\">\u00a0<\/a><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_3_16&amp;content=stock_market_outlook_report\">Just-Released April 2020 Stock Market Outlook Report.\u00a0<\/a><\/strong><br> \u00a0<br> This Special Report is packed with newly revised predictions that can help you base your next investment move on hard data. For example, you&#8217;ll discover Zacks\u2019 view on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>How will coronavirus impact the markets?<\/em><\/li><li><em>The ins and outs of unemployment<\/em><\/li><li><em>What of US GDP growth?<\/em><\/li><li><em>Inside the coronavirus impact on oil prices <\/em><\/li><li><em>US returns expectations for 2020<\/em><\/li><li><em>Is it time to buy US stocks in early March?&nbsp; <\/em><\/li><li><em>What produces 2020 optimism?&nbsp; <\/em><\/li><li><em>And much more.&nbsp;<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<sup>4<\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It may feel like a disaster, but history shows that this market volatility will pass.<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-8550","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8550"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8550\/revisions"}],"predecessor-version":[{"id":10627,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8550\/revisions\/10627"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}