Investing During a Crisis

Good Afternoon,

I hope you are healthy, safe and calm during the uncertainty caused by COVID-19.

Today, my objective is to encourage you to view the current environment as an opportunity.  For many who are reading this, it is possible you didn’t own any investments during the last financial crisis.  Fortunately, I have survived many crises during my career.  I want to share my perspective with you.

Investment patterns during a crisis

My career began in 1992.  Throughout every crisis of the past 28 years, markets repeated the same pattern.   

1. Markets dropped before we were 100% certain there was a crisis.
2. Markets were volatile once it became obvious to all that we were in the midst of a crisis.
3. Markets began recovering before we were 100% certain the crisis had faded.

Every crisis is caused by one or more events which eventually tip the scales too far into uncertainty, confusion – and fear.  Some investors choose to sell; selling leads to market declines and more selling, and pessimism fuels more pessimism.  A viscous cycle of negativity takes hold of the market and dominates the headlines.  In the midst of crisis, there is never a clear path to recovery – nor any guarantee there will be a recovery.  Yet, every crisis has been followed by a recovery that ultimately resulted in markets not only surpassing the previous record high point, but in establishing a new record high point for the stock market.  

Investment opportunity

You already possess the most advantageous key to successful investing:  time.  You have years, possibly decades, to invest and grow your wealth.  The time to accumulate wealth is when prices are low – like today.  Consider that many companies are available today at prices that are 10%, 25% or 50% less expensive than their price from only one month ago.  The combination of your long time frame and today’s low prices offers you the opportunity to purchase shares of companies whose products and services you will likely consume for years into the future.  Consider not only holding onto the shares you already own, but consider how many additional shares you can buy when prices are inexpensive.  

How to accumulate wealth

The formula for accumulating wealth in the stock market starts with buying shares of stock, holding the shares, systematically continuing to buy additional shares, and maintaining the discipline to do this over long periods of time – regardless of whether the stock market is going up or down.

If you have questions, wish to discuss your current investments or have a desire to add more money to your investments, please contact Weller Group.

Thank you,

Tim