Do you know what today, March 9th is?
It is the anniversary of the Financial Crisis market selloff that bottomed on March 9, 2009. Coincidence?
Yes! But there are also lessons we can take from previous periods of market volatility.
Selloffs in stocks are not fun for many of us. On extreme days of volatility, such as we are seeing today (at one point, the DJIA was down 2000+ points this morning), it is completely normal to second guess why you own ANY stocks. But unless you have money invested that you need to spend in the near term, today is almost certainly a bad day to consider selling.
If your goals are longer term in nature, it may actually be a good time to consider adding to your stock positions. Sound crazy? That’s exactly why it may be worth considering. Remember how you may have been feeling back in 2009?
Markets rarely offer “sure things”, but they do tend to offer higher returns for taking more risks. If you are willing to buy when seemingly everyone is selling, you likely are putting yourself in position to earn higher returns.
As the volatility creates imbalances in our clients’ allocations, we will make trades to move them back into their intended mix. This disciplined approach of keeping portfolios in line with a previously agreed upon allocation doesn't keep us from experiencing losses, but it does encourage us to "sell high" and "buy low", at least relatively. It also should ultimately lead to a smoother ride overall.
If you haven't made your 2019 (or 2020) retirement account contributions yet, now may be a good time to practice a similar disciplined approach of making those investments while the market is lower than it was previously. Of course, if you are dollar cost averaging, it is this kind of event that allows you to lower your average cost.
If you want to discuss your portfolio or overall plan, please let me know. Oh, and Happy Anniversary!