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Feb. 29, 2020, 11:53 a.m. EST

Do this one thing before you react to the stock market’s losses

Don’t do something just for the sake of taking action

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By C.D. Moriarty


Mary Evans/WOODSMAN LLC/Ronald Grant/Everett Collection

The phone is ringing off the hook. The stock market is down significantly, and everyone wants to have answers. The only thing for me to do is dig in and talk to every client. Was this Monday? No this was Monday Sept. 29, 2008.

Over the course of a 30-year career working with clients, I have seen several radical gyrations of the stock market. Everyone wants to do the right thing for their future, including make money. Losing money does not feel good. Today I know the question “What should I do?” is on everyone’s mind.

Here are the questions you need to ask yourself:

• Do I have cash for your immediate needs?

• Am I looking to sell for the sake of action and control?

• Do I know how my portfolio has done in the long term?

If you have a good investment professional helping you, you may have heard from them. Markets like these are where they earn their money. If you do not have a professional planner, here is what many planners say when they call clients:

• Review your portfolio and investment strategy.

• Don’t panic; instead, be strategic with any action.

• Consider whether this is a buying opportunity: The old adage “buy low and sell high” may apply.

No matter how good an investment person is, remember that no one knows the future path of benchmarks like the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.36%  . If you are in the stock market, you need to be thinking long term. Money in the market means you do not need it for more than seven years. Any shorter-term money should be in bonds and cash.

Let’s look at the information you need for today whether you have a planner or not. Even though history does not predict the future, what perspective does tell us is the stock market goes up and down. As short-term thinkers, we happily remember the market of the past 10 years with its long bullish ride up. Teasing apart the details of the past:

• The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.62%   closed at 26,091.95 just over year ago, on Feb. 26, 2019.

• Just over 10 years ago, on Dec. 31, 2009, it closed at 10,428.

Yes, this past week saw the largest percentage drop since October 2008, and it feels bad in the moment. Historical drops are best evaluated by percentages, not the actual points number of the slide. Read this to get some historical context about stock-market moves.

/zigman2/quotes/210599714/realtime
US : S&P US
3,306.51
+11.90 +0.36%
Volume: 2.40B
Aug. 4, 2020 5:20p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,828.47
+164.07 +0.62%
Volume: 355.46M
Aug. 4, 2020 5:20p
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