For anyone that knows me already, it’s no secret that I am forever optimistic when it comes to investing in the stock market.
But what about times like this when the stock market is crashing so badly? I mean, we’re looking at -30% loss in 30 days. The stock market had it’s biggest 1-day crash on Monday, March 16th, since 1987. That’s crazy, right?!
Is it time to panic?
No. It is not.
It’s really simply. This is a moment to embrace, not to fear. As Warren Buffett has famously said in the past, “Be fearful when others are greedy and be greedy when others are fearful.” I can’t emphasize this enough.
It’s important to clarify that this advice only applies if you are more than 5-10 years away from retiring. Why do I say this? It’s easy. Just look at the market history to find out:
And the Bull Market Continues to Surge Forward w/ Full Force
Let me summarize: The most the market has ever taken to recover from a crash in the past 94 years was 9.5 years. That was between 1968 and 1978. If you are retired or you are about to retire and you still have 20-30% in the market, or, heaven forbid, more than that, then I’m really sorry, but it’s a little bit too late to react to this right now. First of all, shame on you. Stay the course. Set your emotions aside and let the market take its course. If you are in a hospital bed or if you believe you could pass away in the next 5 years, please PLEASE make sure that you have the mechanism already in place to transfer your entire account and all of your assets to a loved one. Do not sell right now unless you absolutely need to.
Let me preface the rest of this post with the following: I cannot legally provide financial advice to people. This blog, however, is a great place for me to voice my opinions and viewpoints on investing. Most authors, when they make these types of statements will mention that you need to seek help from your financial advisor. No! Don’t do that. You are in control of your own money and only you. These statements always bother me. You can do just as well as any financial advisor with your OWN money if you are smart about it. It is not rocket science. It really isn’t.
With that said, it’s my strong belief that you should be taking a close look at all of your money across all of your bank & investment accounts right now. Ideally, you should have been doing this a couple months ago, even years ago. But it is never too late. Let me ask: Do you have a strategy right now?
If your answer is “No”, then that’s OK! Doing nothing is not a bad strategy at all. Things WILL recover. Even though I’m not an expert, as mentioned, I know a good opportunity when I see it, and I would be a lot more optimistic than pessimistic right now.
So, is it time to buy or sell right now… what do you think?
If you agree that it is time to buy, then please read on…
If you think it is time to sell, then PLEASE do me a huge favor and DON’T do that. Just stop reading this post and go play some Solitaire or do a crossword puzzle or something.
Now, this takes a lot of discipline…, and I also have a really hard time doing this myself
, but I can’t emphasize enough how important it is to avoid going ‘all in’, all at once. This is still a subjective topic… Let me clarify that it’s OK to go ‘all in’, just NOT all at once. Even I made this mistake recently, but thankfully it wasn’t ‘ALL in’. Just mostly ‘all in’. The reason this is a subjective topic is because I am human just like everybody else, and we all believe we can “time the market” to a certain extent. You just need to be careful with how much you are investing, where it is being invested, and how often you are investing it.
Are we at the bottom of this madness? Who knows! Could it drop a lot more? Yes. Or no. Have we gotten past the worst already, in other words, if you go ‘all in’, is it that big of a deal? Nobody knows!
What bothers me are the people who go ‘all in’, get the timing right, and then start bragging about how they were so smart. This is what perpetuates stupidity. It’s so easy to think and believe that there is a secret method to timing the market. Well, let me help you out for a minute. There is not.
In the end, while I think it’s much easier to go ‘all in’ than to stress yourself out over having to log into your account to do it multiple times, I think you have to make a judgement call on this based on your level of interest. If you create reminders and divvy up your money where all you have to do is some quick division based on the share prices at the time, you can take these actions without any emotion & they can even be done from your mobile phone in a matter of a couple minutes. Don’t stress yourself out with limit orders, either. Some TRADERS (big difference between a trader and a long term investor) will strongly advise against market orders, but for the average investor, it really doesn’t matter. Market orders are a lot easier, faster and less stressful. They are fair, too. In other words, the trade takes place instantaneously.
A friend of mine recently asked if it would be a good time to bet big on a stock that they strongly believe in: Tesla ($TSLA).
If you are going to bet big, please restrain yourself. I would encourage you to redefine your definition of “betting big”. Is it being done in the 30% portion of your portfolio? I hate to say it, but Tesla is still considered a speculative investment. I am tempted to bet big on Tesla myself right now. It is headed to $300/share when it was trading at $900 just 1 month ago. But if you don’t already have 70%+ of your money in the S&P500 (index fund or individual stocks like the dividend aristocrats are my favorite), then I would definitely do that first. I’m talking about across all accounts, including retirement accounts. Just don’t be irrational with any drastic decisions. This is your hard earned money after all….
If you still believe you need to bet big and take big risks to win big, and if you are thinking that now is that time, then you really need to check your ego at the door. I’ve been thinking about this often myself recently. But when you hear people bragging about huge gains from huge investments, there is an equal amount of people (50%) who tried the same thing, failed, and never said anything. I wonder why you never hear from them??? Don’t be foolish. Seriously folks.
If you have a large savings account and you already have a 6-month emergency fund secured, then you should really especially be looking at buying opportunities right now. Now is the time to act. Start transferring your savings money into your investment account NOW so that you can at least be prepared to invest it in the next couple of days. I would advise not investing it all at once as I had mentioned previously, if you can avoid it. What happens if the market continues to drop? Don’t say I didn’t warn you. Split it up among 3-4 investments over the next 4-6 weeks and stick to your plan.
Regarding that 70% (it could be 75% or 80%), if you don’t already have that established, I am a big fan of the S&P500 Dividend Aristocrats. You could take a shortcut and invest in the ProShares S&P 500® Dividend Aristocrats ETF ($NOBL), or you could create and manage your own portfolio of high dividend stocks. I have posted about this multiple times in the past, but please make sure you have a DRIP plan established in your investment account to reinvest the dividends automatically. Just as an example, I am making $300-$500 every month in dividends alone.
If you feel like you can really get into this and you’d like to have some fun watching your money grow over time, you could take charge of your own strategy & invest in individual stocks. Here are some the top performing dividend stocks in the S&P500 right now, in order from highest to lowest, which I own myself:
Abbvie
AT&T
Chevron
Leggett & Platt
Consolidated Edison
Nucor
Kimberly Clark
Johnson and Johnson
Coca Cola
Clorox
P&G
Target
Other stocks that are currently on my radar with the recent effects from COVID-19 that I believe present great opportunities for the 30% portion of a portfolio:
Hotels (Ex: Marriott)
Cruiseline companies (Ex: RCL, NCLH, CCL)
Airlines (DAL, BA, AAL, … strongly consider Boeing)
Another opportunity worth looking at would be US Foods (USFD), which is significantly down for no reason.
There are many more!
The last piece of advice that I’d like to provide goes back to 2014 and 2016 when I wrote some posts about a looming market crash. I was freaking out in 2018 when the market just kept going up & up. As soon as the bull market continued to surge forward in the beginning of 2020, I was beginning to think there was no end to it. A couple of economists were commenting on how unusual it was, and these articles made the circulation time and time again, but for the most part, for the majority of the people out there, including a lot of my coworkers, the market gains were being treated like they were normal. So if you are freaking out about losing money right now, take a deep breath and look back to 2014 and 2016 when we were already too high. 2018 was unrealistic. 2019 was insane. We are just now returning to 2018 levels. This is normal. There is nothing to freak out about here.
Do Not Panic!