It looks like the time has come. For those of you who were around in 2008, you’ll remember this feeling well. For those of you who are new to this, welcome to the party.
I’ve just watched the Dow fall over 2,500 points for its biggest crash since 1987 Black Monday. We are now well and truly in a bear market.
The coronavirus continues to spread through the world and does not look like slowing down any time soon. Entire countries are shutting down – no school, no events, no public gatherings, the only things open are pharmacies and grocery stores. Things are just heating up in the USA, but I suspect it will be bad there. Here in New Zealand, we have the advantage of being an island country and are naturally isolated, but things have the potential to be bad here too.
The coronavirus might seem like the cause of the financial turmoil in the markets, but it isn’t. Weight has been building on the markets for many years, with mega low interest rates (even negative rates in some countries), ridiculous P/E ratios, a bull run that has been fuelled by record greed and relentless printing of money. It has been the building of the bubble of all bubbles. Coronavirus is simply the final straw. Now it all comes crashing down.
What to do in a situation like this?
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The first is, make sure you have a good percentage of your portfolio in cash. If so, sit pretty. If not, start moving to cash now.
The second move is, sit still. RELAX. It is easy to lose your mind watching the market tumble off a cliff. But remember, markets don’t go down forever. In fact, they don’t even go down for long. In a few years, things will be back to normal.
And that’s where the secret is. There is going to be some incredible opportunities for investments in the next 12 months. Stay sharp, do your homework, and get ready to make some good decisions. Blue chip stocks, ETFs and situational stocks are all good buys towards the bottom of a downturn.
But, the most important thing during this time is to take care of you first. Remember, your health is always your priority. Stay safe, follow all the medical guidelines, eat well, get lots of sleep, exercise, stay healthy. Money isn’t everything and certainly not the most important thing during a time like this. Keep yourself and your families safe.
I’ll keep you updated on any big moves I see.