The market has sold off. But some selloffs are indicative of an impending bear market, while others are buy-the-dip opportunities.
While there are cyclical risks out there, there is plenty of reasons to believe in a sustained bounce. And if you're a long-term investor, especially if retirement is far off, being substantially invested is highly unlikely to hurt.
Before we dive in, here are the essential facts of the past week or so:
All three major U.S. sold off Friday, although the losses moderated from over 3% on each index to below 2.5% at least for the S&P 500. The S&P 500 is deep into in correction territory, down 14.2% from its all-time high, hit in February.
The S&P is trading at just above 16 times next year's earnings forecast, although many companies may revise earnings down for 2020. But the level of the market against the 10 year treasury yield down to just 1.14%, is attractive compared to historical standards. Wall Street also expects the Coronavirus to be eradicated in due time, making the second half of 2020 strong against the first half.
Here are three pieces of investing advice to never let go of, according to UBS Financial Adviser Tracy Byrnes:
Wait For More Information
"We all have to take a step back and wait for some clarity on this. It's overseas that's truly bringing us down. Granted, we have supply issues for sure, but we need clarity. We need to hear from China that they finally have it [virus] under control. We need to hear from the Fed. So before you pull everything out of the market and put it your mattress which at this point now would be terrible, let's just wait."
Remember Why You're Invested
"You have to remember why you're in the market to begin with. You're in the market long-term. We can't let this one week totally destroy all your investment theses. I'm saving for retirement. I'm saving for college. So the money is there -- it needs to stay there. Look back at your portfolio. See how you did over the last three years. I'm pretty sure you're going to be pretty impressed. And then yes, you've got opportunities to go shopping [for stocks]."
Rebalance Your Portfolio
"Look at your portfolio. I'm sure it's off a little bit, especially if you had money in tech. Those companies have been on fire. Maybe you want to pull some out or maybe you want to move out of fixed-income and into other equities. There are some solid sectors out there that we are going to start to see more and more activity out of -- genetic therapy, no surprise. You will always have digital, the cloud, artificial intelligence. Those will always be opportunities over the course of the next couple of years. And sustainability of course. Any company that is involved in the ESG protocol."
"Waiting for the bottom -- I think that's a fools game."
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