Timely and Relevant News: March Market Madness
It looks like basketball isn't the only thing that will involve march madness this year. Monday sent investors reeling after the markets dropped significantly. Many are likely to attribute the market plunge to the coronavirus; however, a closer look at the global climate shows that there are other pieces moving on the board.
Panic ensued and global markets plunged after negotiations between OPEC and Russia regarding oil prices broke down. According to CNN business, "The panic began after Saudi Arabia shocked oil markets by launching a price war. The kingdom is trying to retake global market share after Russia refused Friday to go along with OPEC's efforts to rescue the oil market from a plunge in demand caused by the coronavirus outbreak."
President and CEO at Covenant Wealth Strategies, Ward Keever, IV understands the discomfort that clients are experiencing. He stated, "When we are uncomfortable and experiencing pain or anxiety, it is normal to want to make it stop. However, when it comes to investing, reacting with a 'make it stop' mentality is rarely wise."
"Panic selling" is what occurs when investors see a drop in the market and make a hasty decision to sell all their stocks and move to cash in an effort to prevent more loss in their portfolios. This phenomenon could cause certain stocks, which would be otherwise unaffected, to drop in value.
Instead, we encourage our clients to remain focused on their long term goals. Funds should only be invested if there is not an anticipated need for cash in the next 12 (or even 24) months.
The good news is, even though the coronavirus is the new shiny scare, markets have experienced similar events in the past such as the "Swine Flu" in 2009 or the "Hong Kong Flu" in 1969, neither of which led to a recession. Each new flu is another opportunity for market fluctuation. As such, our investment team continues to monitor the situation and make tactical shifts as needed.
If you have specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up time to discuss further.