on May 18, 2021
Media outlets love to publish headlines that stir up fear about an impending stock market collapse.
“10 Signs the Market is on a Downward Slide!”
“4 Reasons to Move Your Money from the Market!”
“Get Ready for the Next Big Collapse!”
There’s a reason for all this doom and gloom: it garners attention and generates clicks. People click on the articles because they are unsettled (even if they know, logically, that they shouldn’t be). The reality is, this is the same, tired scare tactic that is used time and again to increase ratings. Here are the less glamorous, realistic headlines:
“Focus on Long-Term Investing, and You’ll Be Fine.”
“The Market Always Experiences Highs and Lows.”
“The Economy is Still Chugging Away…”
At the beginning of the coronavirus pandemic, the stock market plummeted and a whole lot of people became nervous and withdrew all their investments. In no time, however, the market rebounded and grew more than ever. That’s because the economy did not come to a grinding halt. We all still relied on a variety of businesses to get us through the day-to-day and supply us with groceries, electronics, office supplies, pet food, and much more. Yes, some businesses took a hit, but others thrived. If your investments are well distributed (talk to your financial advisor about this), there’s no need to worry about individual businesses failing.
Some doom and gloom headlines are saying that the stock market is at an artificial high and is bound to plummet. I say, that’s nonsense. As a nation, we’ve saved far more during the pandemic than we ever have before (from around 7% of our income pre-pandemic to around 20% during the pandemic). Once things return to normal (or a “new normal”), many individuals will have excess cash and will, hopefully, tuck some of it away in the stock market. If that happens, we’ll see the market soar even higher, rather than crash.
I do not, of course, have a crystal ball and cannot see the future. It’s possible the stock market will go through a rough patch and will take a downward turn. That’s nothing unusual, and it’s nothing we can’t get through. I’ve seen it many times before, and I’ll see it again. The important thing is to keep calm, focus on the long term, and don’t let frightening headlines get to you. When in doubt, give your financial advisor a call! They are often voices of reason in a sea of uncertainty.