March 3, 2020

Not long ago, some investors had yet to experience what it was like to weather turbulent markets. Even those who had, might have forgotten how scary it can be. This concerned us. So, to help people practice for scary days ahead, we published a fire-drill piece: “10 Things To Do Right Now While Markets Are (Not Really) Tanking.”
Well, guess what? In case you haven’t noticed, scary days have arrived, thanks to the concern over how coronavirus might impact our global economy. As we draft this update, headlines are reporting the biggest weekly stock market losses since 2008.
As usual, we won’t predict whether the current correction will deepen or soon dissipate. But what was good advice in mild markets remains even better advice today. Given the current climate, we republish a slightly updated version of our “fire drill.”
Of course, we continue to advise against trying to react to an unknowable future. But we also are aggressively looking for ways we might be able to help clients make lemonade out of this week’s lemons – such as through disciplined portfolio rebalancing or opportune tax-loss harvesting.
If we can be of assistance in any way, we hope you’ll be in touch. In the meantime, here are 10 things you can do right now while markets are at least temporarily tanking – this time for real.
“Every time someone says, ‘There is a lot of cash on the sidelines,’ a tiny part of my soul dies. There are no sidelines.” – Cliff Asness, AQR Capital Management
“My advice to a prospective active do-it-yourself investor is to learn to golf. You’ll get a little exercise, some fresh air and time with your friends. Sure, green fees can be steep, but not as steep as the hit your portfolio will take if you become an active do-it-yourself investor.” – Terrance Odean, behavioral finance professor
“Do the math. Expect catastrophes. Whatever happens, stay the course.” – William Bernstein, MD, PhD, financial theorist and neurologist
“Choosing what to ignore – turning off constant market updates, tuning out pundits purveying the latest Armageddon – is critical to maintaining a long-term focus.” – Jason Zweig, The Wall Street Journal
“Thus, the prudent strategy for investors is to act like a postage stamp. The lowly postage stamp does only one thing, but it does it exceedingly well – it adheres to its letter until it reaches its destination. Similarly, investors should adhere to their investment plan – asset allocation.” – Larry Swedroe, financial author
“Our aversion to leverage has dampened our returns over the years. But Charlie [Munger] and I sleep well. Both of us believe it is insane to risk what you have and need in order to obtain what you don’t need.” – Warren Buffett, Berkshire Hathaway
“Pick your risk exposure, and then diversify the hell out of it.” – Eugene Fama, Nobel laureate economist
“In investing, you get what you don’t pay for.” – John C. Bogle, Vanguard founder
“We’d never buy a shirt for full price then be O.K. returning it in exchange for the sale price. ‘Scary’ markets convince people this unequal exchange makes sense.” – Carl Richards, Behavior Gap
“In the old legend the wise men finally boiled down the history of mortal affairs into the single phrase, ‘This too will pass.’”
– Benjamin Graham, economist, “father of value investing”