The emotion of fear is at heightened levels. Just look at the panic buying at grocery stores and the panic selling in the stock market. Emotional decisions based on fear have usually proven to be the wrong decisions twelve months later.
Actions being implemented to reduce the spread of the Covid-19 virus is a double-edged sword. On one edge it is a good thing: closing borders, travel restrictions, canceled venues, reduced or closed business, school closures, working from home, staying inside, keeping your social distance and other actions, will go a long way to quickly reduce the spread of the Covid-19 virus and end this disruption in our lives.
The other edge is a bad thing. Reduced business or closed businesses, travel restrictions, and isolation is causing increased fear which is now inflicting pain as people are laid-off and business slows. This will damage the economy and is also having an impact on our investment portfolios.
These decisions will have an impact on the economy for many months to follow. We do not yet know what the impact will be.
Indiscriminate selling has happened all week. Investments not tied to the stock market, like real estate, precious metals and high-quality bonds have been victims of selling pressure as many investors were forced to sell (margin calls) good assets to cover losses in bad assets. This indiscriminate selling has hurt all of us.
At Intermountain Wealth Management we have a disciplined approach to how we manage our investment portfolios. Because investment decisions are not emotion based, there are times, like the present, when we must endure the panic and emotions of the day and stay true to our discipline. This can be difficult at times and emotionally it may not feel right. Looking back over twenty-two years, our process has kept us on the right side of the market most of the time.
Regardless of today’s uncertain environment, we believe the right thing to do is follow our disciplined process for making investment decisions because this too shall pass.