It has finally hit. The stock market big one that we’ve all been telling ourselves (as wise FIRE individuals) about. It’s also the big one for pandemics with Coronavirus seemingly spreading uncontrolled around the planet.
The correct response
The response we have had drilled into us as calm long-term investors in this situation is not to panic, sit back and trust the stock market to come back. After all, the market has dropped like this before and we all know that although it may have taken time, recovery happened.
If you had invested at the depths of the 2008 crash your returns would have been mighty.
We have also been told that this is the time to buy some bargain stocks.
In fact. the ultimate investing guru Warren Buffet said ““Be fearful when others are greedy and greedy when others are fearful.” Time to pile in and buy some bargains!
This is what we’ve been training for? Right?
The actual response.
The sudden drop experienced on Monday, then further massacre on Tuesday and general falls all week was shocking. I kept reminding myself that this was a knee jerk to the Coronavirus and that I shouldn’t panic. However, even though I only checked my balance once or twice a day, the news headlines were everywhere to remind me of the stock market crash happening before my eyes.
In the most part, I didn’t panic, but by Friday I was estimating my losses to be around £12,000 in 5 days. It’s a lot of money to lose in a short space of time. I doubt I could have spent that much in such a time short of buying a car or house.
In actual fact, once I did my month-end net worth update going through all my accounts it showed a different story. I was down by only £8,700.
Much better than expected.
Also, losing £12K and not really giving a shit was kinda empowering. I can’t touch that money for 21 years so it’s not like I lost anything in reality. I can only lose if I sell NOW. Looking at my net worth graph the story shows it is even less of a drama.
I’m not going to blink and am braced for further ‘losses’ but ultimately I will be investing in some bargain markets if I have the spare cash. In fact, I’m debating whether to sacrifice some of my emergency fund to do this, but this is speculation so maybe I won’t.
What I actually did this weekend.
I went up to Birmingham and met up with some old friends, had many beers (one was Corona) and enjoyed myself.
Gotta say, Birmingham is much cooler than I thought. It reminds me of London 15 years ago. It’s not overpriced and its got a lot of development going on. Maybe it’s the next UK low cost of living city? I could be tempted to move for the right job and money.
Let us see what the stock market brings next week…