Investors say “don’t panic”, but should you?

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Last Updated on April 16, 2020 by Mark P.

There are two predictable things in this world- death and taxes. The one thing that no one seems to be predicting right now is the incredibly strange behavior by the stock market. One day we’re looking at Great Depression level drops, the next day we’re seeing all-time-high recoveries. In the midst of incredibly high levels of unemployment, we’re also seeing an investor field day. So for your everyday, middle-class investor, how should you feel about what’s going on? Fearful? Brave?

Some savvy professionals out there on Wall Street are telling us to chill out and not to panic.

New York Post reporter Gregory Bresiger writes that veteran investors are trying to keep their heads cool during this heated time. Bresiger states “Investors can survive and eventually prosper despite the horrific pandemic-driven stock market gyrations we are experiencing.”

One such investor is Richard Bernstein, who told Bresiger “Don’t panic. Never in my near-40-year career have I once heard someone say, ‘Gee, I’m glad I panicked.” Another professional, Kashif A. Ahmed from Bedford, Mass. said that “If you have a good plan, stick to it… contending that bad times could result in good ones.”

It’s important to remember that back in the big financial crisis of 2008, when the housing market fell off a fiscal cliff and the stock market lost “37 percent, many panicked and dumped stocks- which ruined long-term plans, because the market was up 26 percent in 2009.” This is important because this should really focus your mindset on long term planning instead of short term, risky decisions that will pay you today at the cost of a financially secure tomorrow.

“Still,” he continues, “ignoring blood on the Street is difficult. In March, some $15 trillion in market value was wiped out globally, and $8.3 trillion in the US alone since the Feb. 19 market peak, according to the S&P Global.” So as fast as the market can (and will certainly) plummet, it can as we saw very recently skyrocket like never before right before our very eyes.

So what can we do right now to manage our financial stress? Financial Adviser Sandra Adams from the Center for Financial Planning in Michigan recommends the best plan is to invest in peace of mind- a good reserve/emergency fund for times like these.

“Keeping a healthy savings/emergency reserve– as much as 12 to 24 months in cash is a good idea… Cutting back on non-essential spending could be a good idea, especially for those whose income sources may be wavering or are not guaranteed.”

To learn more, you can check out the full piece at the New York Post.