Amid the challenges of avoiding coronavirus, sheltering in place and working from home, we’re faced with another quandary when the monthly investment account statement arrives. Open it and witness the damage or ignore it and wait for an eventual market bounce?
Neither response is wrong. If you choose to ignore your unopened statements, you recognize your own risk of panic. You are aware of the temptation to lock in losses by selling holdings you bought at higher prices. It’s probably best to stay calm and not look.
If you choose to look at your accounts, maybe you are seeking a sense of control – you cannot manage what you cannot measure, right? There might be tweaks you could make and positions you could add to with a long term view. Knowledge can be easier on the mind than imagining the worst.
As you mull it over, we’ve rounded up a few wise words to consider.
Benjamin Graham (1894 -1976) was a British-born economist, professor and author. Famous for his value investing strategies which he detailed in The Intelligent Investor, he wrote:
“The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. He should never buy a stock because it has gone up or sell one because it has gone down. He would not be far wrong if this motto read more simply: Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.”
Graham also wrote this line, which could be the theme of 2020:
“You will be much more in control, if you realize how much you are not in control.”
Jack Bogle (1929 – 2019) was an American investor who invented low-cost index funds and founded The Vanguard Group. His forte included long-term holds, dividend reinvestment and dollar cost averaging. He cleverly quipped that in the face of market turmoil:
“Don’t do something, just stand there!”
Berkshire Hathaway CEO and pithy investment expert Warren Buffett will celebrate his 90th birthday this summer. He says his preferred holding period is "forever" and “the best time to sell a stock is never.”
This gem seems timely:
“Unless you can watch your stock holding decline by 50% without becoming panic stricken, you should not be in the stock market.”
For many investors, a 50% decline has suddenly become a reality. If choosing your own adventure is too overwhelming, it’s a good time to connect with a financial planner who can help you navigate a path forward.