Navigating a Market Downturn
March 10, 2020
Fears about the spread of the coronavirus have roiled the markets in recent weeks. The S&P 500, after hitting a record high just weeks ago, has entered correction territory. A correction refers to a 10 percent decline in a security or index from its most recent peak. While the speed of the decline has left investors spooked, stock market corrections are not in and of themselves a reason to panic.
During market downturns, it is important to focus on the long term. Investors can make themselves crazy obsessing over where the market was yesterday and where it will be tomorrow. Instead, disciplined investors ignore the day-to-day swings in the market, knowing it is much more important to consider where the market will be 1, 5, or even 10 years down the road. The most important thing to remember is that market downturns are not rare events. The typical investor is going to experience several of them during their lifetime.