Earlier this month the stock market hit an all-time high. This week it crashed, reacting to the effects of the Corona virus which has started to take its toll on corporate earnings. The supply chain has been compromised and consumers are retreating to their homes.
Day trading is not for the faint of heart especially during weeks like this. But Long-term investors want sustainable growth for our wealth and part of that process is to expect resets like what is happening in the market now.
If you sold this week like they say you shouldn’t you made a profit. If you bought you paid a better price, then you would have last week. Either way you win. So now what.?
This biological crisis will still be in the news on Monday. Whether it’s accompanied by more warnings by companies about future profits; more Corona virus cases in new areas or the creation of a vaccine – remains to be seen. Additionally, lurking in the shadow of Corona are very high corporate valuations, a lot of debt and some sensitivity to this year’s elections, all which can make buyers skittish.
This week’s crash is the beginning of an opportunity to buy stocks at much cheaper prices. Whether you start to nibble on Monday or wait and watch. Long term (5 plus years) investors should welcome this opportunity. If you spend a little and then the market really crashes, then you can spend more. If the market shoots up before you buy then remember you were already invested.
Our behavior is the biggest contributor to sustainable wealth. Regularly adding savings to your investment account. Buying long term investments. Deciding to work with financial advisers who charge you fees that are commensurate to the service they provide you. And making sure to moderate emotionally driven consumption.
There are no short cuts to long term wealth just the sustainable approach. In the meantime, go enjoy the weekend mingling with the community and firm up your summer holiday plans.
But wash your hands!