Off Cycle Commentary – Nervous Energy Is A Great Destroyer of Wealth – 3-6-2020 Herb Morgan

March 6, 2020 Commentary, Industry News

By Herb W. Morgan, III, Efficient Market Advisors

Nervous Energy is a Great Destroyer of Wealth
-Fayez Sarofim

The financial markets don’t like uncertainty. The current Coronavirus outbreak is no exception, and many investors are tempted by an impulsive desire to “do something.” In our view, this urge is part of the instinctual “fight or flight” in our DNA.

But in times of volatile markets, the best move for long-term investors is often no move at all. While they’re not exact parallels, the stock market responses to the SARS Coronavirus in 2003 and the Zika virus in 2016 offer useful lessons. In both cases, investors who sold on bad news and falling prices missed significant rebounds that very shortly had stock markets back to prior levels. In fact, we believe that adding to portfolios on significant drawdowns or rebalancing portfolios to intended targets can lead to enhanced returns if markets ultimately rebound and achieve new heights. Continue Reading Here

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