It won’t always be easy, but it’s worth deciding how you want to share your legacy so the process goes smoothly.
Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years. Investing with an eye to the long term is particularly important with stocks. Historically, equities have typically outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have involved higher volatility. It can be challenging to have Buffett-like patience during periods such as 2000-2002, when the stock market fell for 3 years in a row, or 2008, which was the worst year for the Standard & Poor's 500* since the Depression era. Times like those can frazzle the nerves of any investor, even the pros. With stocks, having an investing strategy is only half the battle; the other half is being able to stick to it.
Do you sometimes face a flood of anxious thoughts as soon as your head hits the pillow, or struggle to get a negative interaction out of your mind? You can thank your brain’s negativity bias, left over from prehistoric times when humans faced life-threatening scenarios daily. Neuropsychologist Rick Hanson says that this means your brain is “like Velcro for bad experiences, but Teflon for positive ones.” While this is meant to keep you safe, it can be draining to ruminate endlessly about events out of your control (COVID-19 and market volatility, we’re looking at you). That’s why many successful people talk about the steps they’ve taken to overcome negativity bias, from Oprah Winfrey to Richard Branson. The following are seven research-backed and social-distancing-safe ways to help shake off the rain clouds.
The longest bull market in history lasted almost 11 years before coronavirus fears and the realities of a seriously disrupted U.S. economy brought it to an end. If you are losing sleep over volatility driven by a cascade of disheartening news, it may help to remember that the stock market is historically cyclical. There have been 10 bear markets (prior to this one) since 1950, and the market has recovered eventually every time.
The world's economies and stock markets have been rocked by the spread of COVID-19. Investors' fears prompted a major sell-off in February and March, plunging stocks well below their 2019 closing marks. Nevertheless, 2020 started off in a positive way. Following a strong 2019, stocks were slow to move forward as investors cashed in some of their 2019 gains. But by mid-January, each of the benchmark indexes were safely ahead of their 2019 closing marks. However, concerns over the COVID-19 outbreak in China quelled investor optimism. By the end of January, only the small caps of the Nasdaq remained ahead of their prior year's pace.