| Hi Taylor
- There's clearly a lot going on and I'm trying to see if I can filter
out some of the noise. With this virus spreading, how much of what's
happening is an overreaction, especially when it comes to the market?
Hi Eric - This seems to be the question on everyone's mind - are
we taking the right steps and what's the end game? I wish I could
give you a clear answer, but this is uncharted territory, which is
the primary cause of all the panic.
With regard to the stock market, the strong swings are unfortunate
but not too surprising. With a large percentage of investors reacting
more to market moves than the industries pushing the needle, we always
have to deal with an element of overreaction. However, as illustrated
by the two rate drops with little positive impact, the normal tricks
for boosting investor confidence aren't really working.
What we're seeing right now, and will continue to see for presumably
the next couple months, are supply and demand issues that haven't
influenced the market in a long time. First it was a disruption in
global supply from China, then other countries quarantined and compounded
those supply problems, and now we have rushes on inventory and everyday
consumers socially isolating. Enticing interest rates can usually
get people to spend more, but when goods aren't available and health
officials are advising against human contact, that urge to spend drops
That said, the market and the companies that drive it will weather
the storm. This isn't great timing for anyone just entering retirement,
but no one should be doing anything crazy with their IRA. I understand
the feeling you get in the pit of your stomach when your net worth
drops by a big percentage, but there's an end to the financial portion
of this crisis. When it comes to your health, you should be taking
every precaution available to you. As for your retirement account,
take a deep breath and wait it out.
To address the health angle, the measures being taken might seem extreme
and perhaps, in hindsight, we'll feel that they were. However, it
seems that a novel virus spreading at this rate should concern everyone;
upending our lives with school, events, and restaurant closures in
the short term will help us get back to healthier days with fewer
I'm erring on the side of caution with this situation. That means
less socializing and more handwashing, and it also means leaving market
accounts alone and investing more as prices fall and fluctuate. We
might not be able to see it yet, but there's a light at the end of
the tunnel. Take care!
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