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Coronavirus fears and investing: Let’s review the facts

Uncertainty has powered the incredible roller coaster ride in stock prices these past weeks and the remarkable (as well as historic) drop in bond yields.  Don’t expect that to go away anytime soon.  But do keep in mind legendary investor Ben Graham’s advice: “The intelligent investor is a realist who sells to optimists and buys from pessimists.” 

Translation: During market routs like the one happening now consider adding to your investment portfolio.

Graham’s student, Warren Buffett famously said, “Widespread fear is your friend as an investor because it serves up bargain purchases.” Translation: Now might be a good time to put some cash to work or increase your contribution to your 401(k).

My tune will rarely change on this subject. Corrections, even bear markets, create opportunities for patient investors.  According to J.P. Morgan’s 2020 Guide to Retirement, from Jan. 3, 2000, to Dec. 31, 2019, $10,000 invested in the Standard & Poor’s 500 index grew to $32,421 for an annualized total return of 6.06%. By simply missing the ten best days, that same $10,000 investment grew by half as much, to $16,180 for an annualized return of 2.44%.  Ouch.  

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