The COVID-19 market crash we've been waiting for.
A question we ask in every meeting when we're setting up someone's portfolio. How to embrace the ultra negative...
Picture this, your portfolio grows by about 15-20% and you're feeling great about things. Then your advisor tells you that it's time to scrape the gains and park those in cash (or near cash). You agree, it makes sense, even though you might be thinking that by taking that money off the table, you might lose out. Then, a month later, you get hit by one of the biggest market declines in your lifetime and you remember the conversation you had with your advisor about taking that money off the table and you're glad you did.
This is exactly what has happened from January 2020 to present day. It's a fantastic opportunity amid the uncertainty, distraught and isolation we're faced with.
Let's continue the story...
You've been reassured by your advisor that this is what we've been waiting for and that we'll be rebalancing the portfolio soon and that you should probably not look at your statements if it frightens you or makes you want to be sick. Remember, you haven't lost money unless you plan to cash out your entire portfolio right now.
As you continue to see the market drop, you ask yourself "what if the markets don't come back?"
Here's my answer, if the markets don't come back, we'll have a party at my expense. We'll celebrate the end of the world and the end of jobs etc. People would close their businesses and there would be no jobs. "Your kids can quit school" as my mentor used to say. We would have to go back to the bartering system; I've got tomatoes and spinach, what do you have that I need? Then, your money and portfolio wouldn't matter anyway. Money wouldn't be used to barter, food and goods would. Catch my drift?
My advice in these uncertain times? Don't look at your portfolio if you have this kind of FlexPlan in place (see my previous article regarding your COVID-19 strategy), don't cash your entire portfolio out and relax, this is a process.
P.S. Start growing something worth trading, just kidding.
Be well,
CB
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