During times of market volatility, it is always best to focus on your long-term goals. Markets are always irrational and tend to overreact and even become emotion. What we are seeing now is concern about the Coronavirus and what I would consider panic. Decisions made with investing must be made based on your long-term goals, not short-term concerns. Whether its retirement, your family, a legacy, or a major purchase, the focus of where you want to be in the future. As Warren Buffet always says:
Remember, we are investing in individual businesses at the end of the day. Each of them is focused on the continued growth of their business. As businesses grow, the stock price goes up. As businesses slow down, the stock price goes down. With the Coronavirus, we a have nothing more than a reset in how we thought businesses were going to perform. If you are Starbucks, you sell less coffee overseas. If you are McDonalds, you close a few stores. A lot of workers taking time off and not helping their businesses grow. Nothing more than that!
As you can see from the chart below, this is not an uncommon event, just a loud one!
Here are two articles I wrote a few years back during similar periods of volatility. These are also good reads on how to manage emotions during periods like this if you want more to read.
- A blog post I wrote in 2018: https://hindsightbiased.com/2018/11/16/the-urge-to-act/
- A second post I wrote in 2018: https://hindsightbiased.com/2018/12/06/managing-our-emotions/