Riding the Market Rollercoaster
Riding the rollercoaster of the financial markets the past several weeks has been dizzying. Not only are the markets down a lot due to economic concerns over the impact of Coronavirus, which is nauseating in itself, but the volatility is high. There have been days of +/- 10% gyrations in broad market indices. It's mind boggling to see that on those days my household's investments gain or lose an amount comparable to one of our annual salaries. On one day.
When the market's as low as it is now, with many good companies' stocks mispriced, it's tempting to be a buyer. But it's hard. For one, there's the dizziness from the magnitude of the losses. We've lost 3 years worth of returns in the past 5 weeks. Two, the volatility is maddening. It's hard to be a fundamentals investor when market sentiment shifts so wildly from one day to the next. Some stocks I bought 4 weeks ago, thinking "Hmm, this is bargain priced now relative to its intrinsic value" are down more than 20% since then. I wish I'd left my money in a cash savings account earning less than the rate of inflation.
When the market's as low as it is now, with many good companies' stocks mispriced, it's tempting to be a buyer. But it's hard. For one, there's the dizziness from the magnitude of the losses. We've lost 3 years worth of returns in the past 5 weeks. Two, the volatility is maddening. It's hard to be a fundamentals investor when market sentiment shifts so wildly from one day to the next. Some stocks I bought 4 weeks ago, thinking "Hmm, this is bargain priced now relative to its intrinsic value" are down more than 20% since then. I wish I'd left my money in a cash savings account earning less than the rate of inflation.