At the time of writing this article the Dow Jones Industrial Average (DJI) has dropped from a high of nearly 30,000 to an intra-day low of about 25,000, swinging 1,000 to 2000 points up or down on any given day. Words and phrases that come to mind include: market turmoil, panic selling, a market “seeking a floor or bottom”, a buying opportunity, and simply, a test of investor confidence.
Yesterday, outside a doctor’s office, I overhead an apparently nervous (shell shocked?) investor being yelled at (the call was on the listener’s phone’s speaker) by his financial adviser – be that his stock broker, financial planner or his son. It was clear that the person speaking was agitated – stringing together arguments and criticisms about “not the time to panic” and “don’t make emotional decisions”. I’m fairly certain the listener was not convinced.
What I find interesting is how many people are, in fact, in shock or turmoil or are surprised by the market downturn. Didn’t we go through a similar “shock to the stock market” a little more than a decade ago?
What I find mildly amusing is how just a week ago, while exercising in an outdoor pool, the pool-pundits were unanimous in their self-congratulatory assessment of the wisdom of voting for a certain president who has taken single-handed take credit for the extended market rally. (A story and topic of analysis for another day.) Of late, however, that same president it getting credited with exacerbating the stock market’s turmoil.
So, what’a a poor bloke to do while the market swings wildly and unpredictably from day to day? Sit on the sidelines? Sell and hold cash? Move cash into the market? Seek to profit based on calamity and tragedy?
Or simply act like a calm, well-informed and reasoned investor . . . and capitalist (a sometimes dirty word in 2020)?
Profiting from a tragedy or calamity, such as a pandemic, will never make you a hero. Profiting from others misery will not make you liked or likable. However, what about investing in companies that will be part of the solution? Companies that will not or are not known for price gouging or profiteering? Companies that, by virtue of investment, will be better able to help bring products (vaccines) or services to market that will help save lives?
Do you want to speculate that people will horde goods and that will drive up demand and profits and that’s what you should target? I wouldn’t call that a proud moment anymore than I find myself endeared to people who recently have taken to hording toilet paper or hand sanitizer. However, ethics or a sense of civic responsibility may not be your defining quality.