Panic is setting in.
I hear whispers about the outbreak walking down the street. Small talk around the office isn’t complete without some mention of the virus.
It’s too early to know whether the world can shake off the virus … or if we are going to see panic set in as nations try to close their borders.
But times like this remind me of an old mantra: “Plan your dive, and dive your plan.”
I would hammer this into my students’ heads when I taught diving classes.
The idea is nothing new. Plan out your best- and worst-case scenarios.
Then, no matter what happens, you know what to do. You have a plan.
And having a plan is key for not panicking.
In today’s market, you need to know your plan and stick to it…
Because fear is spreading, and you’re going to get hurt if you don’t have one.
Investment Advice Everywhere
The market is falling, and every TV personality, analyst and checkout clerk is going to start telling you what to do with your money:
“Time to get into gold.”
“Sell all your stocks!”
“Hedge your portfolio with puts.”
“Buy the dip!”
Each of them could have a valid point … if it’s part of a bigger plan.
But the worst thing an investor can do is stray from their plan.
If you don’t have a plan, you need to make one. Now.
A Dose of Reality
We need to put the coronavirus in perspective. It has a death rate of about 2%. For comparison, the seasonal flu is usually below 0.5%.
The SARS epidemic had a much higher death rate of about 14%. And Ebola is one of the deadliest viruses at roughly 50%.
That means the coronavirus isn’t to be taken lightly. But it’s also nowhere near as deadly as other epidemics that grabbed this much media attention.
The real threat to the economy comes from mass panic.
Government officials could enforce quarantines. Transportation will slow and consumption will fall if people are too afraid to go out.
But these are all temporary issues. The outbreak will either be contained or burn itself out.
And the economy will bounce back.
Consider subscribing to the Alpha Investor Report. Every month, Charles Mizrahi brings his readers a growing business that’s trading at a bargain price.
He focuses on the fundamentals and ignores the headlines. That’s a sound strategy for surviving the market’s mania and anxiety.
Managing Editorial Analyst, Winning Investor Daily
P.S. Check out my latest video below for this week’s marijuana market update. Also, don’t forget to subscribe to my YouTube channel — and click the bell if you want to get a reminder every time I upload a new video!