Thoughts on the Market

I’d like to share some of my thoughts on the current stock market climate. For those who do not know, the US stock market just had its worst week since the financial crisis. In recent days, the S&P 500 declined more than 10% from its most recent high and is now in what is known as “correction” territory.  Overall, trillions of dollars were lost in America this week, for both individuals and institutions. The prevailing sentiment is all of this selling was primarily driven by Coronavirus fears. In fact, this was the fastest correction since the great depression and last week was the worst week for the stock market since 2008.

So what does this mean?

Well, aside from meaning most people saw their account values drop, it also means the market is noticeably cheaper than it was just two weeks ago. This is important for someone like myself, a near 28-year-old, who has a long term investment horizon because the stock market is effectively on sale. Basically, a 10% discount as it currently stands.

Declines in value, like the one we are in the midst of, are good for any investor who has a long term investing horizon, and it would be prudent to invest extra cash if you can. What you chose to invest in is up to you; individual stocks, ETFs, mutual funds, almost all of these investments are on sale. I personally put money to work in my favorite Fidelity funds (FNILX, FZROX, and FZIPX), as well as rebalanced my 401(k) to put more weight on stocks.

No one can predict when the market will bounce back, but history indicates it will. I look forward to seeing what the market has in store for next week. Should markets continue to drop and get closer to “bear” territory (20% decline from the most recent high), I will put more money to work, likely pulling it out of savings and spreading it amongst my taxable account and my Roth-IRA. If markets show life and start to increase, I’ll likely still put some money to work, but probably not as much.

If you have some extra cash and don’t need it for some time, maybe think about putting it to work.

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