Greetings everyone, we’d first like to take a second and say we hope that everyone out there is healthy and safe as we move through these challenges that the world is being faced with currently.
With us expecting our first child any day, major headwinds in the oil and gas sector where we work, the global pandemic and the stock market “crashing” all simultaneously it’s safe to say that we’ve had ourselves a few stressful days here, but today we’d like to focus on the good things and that’s what we’ve been able to learn through this stock market crash.
Risk Tolerance
I’ve been going to work as per usual throughout this market and as such have come in contact with a fair few people, so we’ve been able to have some conversations and share our thoughts on the way the markets have been heading and where they could be going moving forward.
I would say that without a doubt the most troubling thing that has come from these conversations is that people have some major sums of money wrapped up in things they first off don’t understand, and secondly that are way too aggressive for where they’re at in their careers or are comfortable with.
Everyone loves “risk” and “high volatility” when the market is in the largest bull run we’ve ever seen. But the second that that is flipped on it’s head that’s when the truth comes out.
What I mean is, there have been a handful of people I’ve spoken to who are panicked. Panicked is a normal feeling in environments like we’re currently faced with, but what should not be accompanying these feelings are phrases like “I’m selling everything and moving into money markets” or “I’m going pure cash now and I’ll buy back in at the bottom”.
The timing of this post sort of validates the responses I’ve been giving to whoever seeks an opinion and that is: DO NOT SELL.
I try to emphasize that if you’ve been in “high risk” or full equities and you’ve been dropping hard the worst thing you could then do is sell out and miss the rebound or move into cash/money markets and recover slowly.
Nobody knows where a bottom is and hindsight is 20/20. The last two days the markets have had a huge rally back from their recent low’s so is this the time you’d buy back in? Perhaps it could be the “right” time but we’re also still right in the middle of this outbreak and there could be even more volatility ahead as company earnings (or lack thereof) come out.
Now to get on to our feelings and what we’ve personally learned from this it’s been that we are allocated exactly as we should be at this point – with a few minor exceptions:
We’ve had basically zero nerves or panic in our household over the stock market decline and that’s quite simple: We’ve got a plan and we stick to it.
We didn’t sell anything. In fact we have bought and continued to buy opportunities we’ve seen in the market. We’ve bought the whole way down and will continue to buy the whole way up.
Why? Because we’re a 31 year old couple and know what we’re invested in. We hand pick our holdings of companies we truly believe in long term and that we receive some sort of dividend to help ease the pain during these times, yeah some dividends may get cut but we’re still receiving paycheques to keep our holdings while the recovery takes place regardless of how long this all takes.
Where to from here?
What we would like fellow investors to do from here is reflect upon how you are currently feeling and how you have felt through all of this turmoil and make the required changes moving forward.
Ask yourself things like:
“Did we have enough cash on the sidelines?”
“Do we believe in our holdings?”
“Should we have (more) bonds?”
“Are we taking too much risk based on our ages?”
These are very important questions, because if you’re one of those people who have been lost through this all or have been torn on selling day after day not knowing how to deal with the volatility then you need to sit down and make a new plan for yourself now armed with the information of how your emotions hold up during challenging times.
Remember to check in with your professional financial planners before making any drastic changes to your retirement plan and get their professional advice. Our goal on this blog is to share our journey and to hopefully help you all ask the right questions and help you reach your financial goals.
Thanks for stopping by,
FIC.