Panic! at the stock market (and what to do about it) 🙇♀️
TLDR: When the stock market drops, you should do NOTHING.
Longer Version: I’ve written iterations of this post before, but now is as good a time as any to remind you all why you don’t need to panic just because the stock market is. If you’ve seen headlines like “Coronavirus Has Slammed the Stock Market” or “Stocks Fall as Coronavirus Fears Hit Global Markets,” and you’ve been like “shit I need to GTFO of the market asap,” then this post is for you (*spoiler alert* you DO NOT need to GTFO of the market and in fact, you should stay right where you are).
WTF is going on?
We’re experiencing a stock market correction (a correction is when the market is down 10% or more since it’s most recent record high). This correction is happening mostly, among other things, in response to the Coronavirus. Even though the virus is predominantly impacting China, world-trade is impacted because China trades with a lot of countries.
People are flipping out, and pulling their money out of the stock market, causing stock value to go down (because the value of a company is largely about public perception (shrimp pizza perceived as valuable = shrimp pizza stock value goes up: the cost of anything is determined by how valuable people think the thing is). Since public perception largely guides stock value, human emotions play a huge role in deciding what value a stock has. When humans feel panicked, they make emotional decisions (see: why we should all be in therapy).
We’re feeling a lot of fear right now because of Coronavirus and the market is a reflection of that fear.
But repeat after me: we don’t need to make emotional, fear-driven decisions about our money.
To help you stay calm and grounded in logic, here are four reasons NOT to panic:
1. Remember that the money you’ve put in the stock market isn’t money that you need for a while anyway! If you’ve committed to regularly investing in the stock market, hopefully whoever guided you reminded you that you should only put money in that you’re comfortable not touching for a WHILE (like, many many years). Your money has time to wait out the stock-market-storm and go back up later. Stop checking your investment account everyday and go take up a better hobby.
2. The stock market is volatile. Full-stop. That’s not news! Asking, “why is the stock market going up and down?!?!” is just as ridiculous as asking “why do dogs like playing with balls?!” (see photo of my dog, Rosie, who wants to play with her ball at literally all hours of the day and goes to sleep with it next to her just incase anyone wants to wake up and play at 4 AM). Would I ever be surprised that she’s doing what a dog does and wanting to play with her ball?! Nope. Should I be surprised that the stock market is doing what stock markets do and going up and down?! Also, no.
not surprising
also not surprising
3. News outlets are incentivized to stir up fear and make you panic (panicked people read more news, repeat). This has happened before. And it’s going to happen again. If people are telling you, “but this time…it’s WORSE!” kindly tell them to STFU. People have said that during every crash in history. They love to be the bearers of bad news (and when the market is low like it currently is, there’s a lot of bad news to stir up). Which article are people more likely to click on, one that says “The Market is Volatile But Everything Will Be Ok”? Or the one that says “THE MARKET IS CRASHING! RUN WHILE YOU CAN!”? (Look at my article title! I have to compete with the haters and get you all reading my posts somehow!) Stop listening to the panickers in the back and keep your money right where it is.
4. The stock market historically rises after every.single.fall. Corrections happen on average once a year, so, here we are! Historically, corrections last for two months and then they end. In the past 36 years, the US market has ended the year with a positive return 75% of the time. There are manymany stats to hang our hats on that should leave us feeling grounded.
