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Well Diversified Portfolios Should Survive The Pandemic

April 15, 2020

We always say that we try to build an all-weather portfolio to bend with the markets ups and downs but not break. While all portfolios are being tested, it is important to step back from the emotional side and reflect on the future.

As you’ve noticed, the market swings up or down based on the headline news. However, this pandemic will pass – we just don’t know when. If your portfolio reflects what your money needs to do for the future, it needs ebb and flow with the market for your financial needs years from now.

The losses and gains are on paper. This means they are numbers on a page that only become “real” if you sell a holding. In a down market, you may “realize” a loss that has tax consequences. Same when selling for a gain – there are usually tax consequences.

It seems the best way to survive this downturn is to:

  • Review your spending. We always recommend people spend less when the market declines
  • If you are contributing monthly or annually, continue to do so. You are buying shares at a cheaper price and isn’t the objective, buy low(er) and sell higher?

If you are thinking of selling because the market is down, when will you buy back in? History shows us that timing the market isn’t possible. What is important is the time in the market, not out of the market. JP Morgan calculated the impact of having $10,000 and not staying in the market.


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