Fear of the pandemic spread of the novel coronavirus in the U.S. and across the globe, and the panic selling of stocks has assumed a vice like grip on the U.S. equity markets over the past several trading days. This is evident by the massive selloff of the markets over the past several trading days.
Take the S&P 500 benchmark, it has entered correction territory when measured by a ten percent decline from market high. Minutes prior to Friday’s market close, the S&P is down 14.3% from its all time high that it reached less than two weeks ago.
And the advice from financial advisors and pundits to remain calm and not sell–selling will only lock-in your paper losses into real losses–is apparently being ignored many retail investors. Basically, it appears that a majority of investors have succumbed to financial entertainment media’s hyper reporting of the news.
No one knows how long the panic selling will continue or when the downward trend will reverse. And, no one can safely predict the impact the novel Coronavirus will have on corporations’ quarterly earnings.
Couple this with Socialist Bernie Sanders recent success in the first three Democratic caucuses and primaries, this market correct may persist for awhile and may dip its toe into bear market territory before we see the current trend come to an end.
Needless to say, investors must remain calm and adhere to their long term investment plan. Fear and panic selling has never been a successful investing strategy. And, it should not be embraced today.
Instead remain calm and if you have cash available, take the opportunity to buy great companies while they’re on sale.