The stock market was down 11.97% today as new guidelines were announced to curb the spread of the Coronavirus. This action in the stock market was a reversal of the 9.32% gain that occurred on Friday. These large swings will most likely continue as headlines reflect the updates of the Coronavirus. Although the selling of stocks may seem unending, it is D’Arcy Capital’s opinion that it will begin to taper off and volatility will moderate. Historically, the stock market has proven to be a self-correcting mechanism and we believe stock buyers will re-emerge in response to incredible values and lift stocks higher. It is very hard to predict when the stock market will “bottom,” but it will. Often times the best performing stock market days occur when it is least expected.
We all understand that investing is a long-term proposition. We, as investors, agree to endure short-term volatility in exchange for long-term growth. We are in the high volatility portion of that equation currently. The longer term benefits will likely come later this year. Intently following intra-day and daily changes in stock values is counter-productive. Imagining the environment in three months, six months, and three years is more useful.
It is vitally important that we focus on the long-term, adhere to pre-established investment strategy/allocation, and resist the current emotional urge to sell.
D’Arcy Capital will continue to use this selloff to manage to the long-term, make tax advantaged trades, and to keep the events of 2020 from permanently changing the long-term expectation for your investments. This current environment will pass and stock markets will rebound.
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