Stock Market Crumbles

It’s was a week of heightened concern for investors. While I generally view downturns as an opportunity for reentering the market, I know it can be disconcerting when you watch 10% of your investment balance just disappear.

From the Wall Street Journal: “Investors are bracing for more volatility ahead. The Cboe Volatility Index, or VIX, jumped to 45.67 early Friday, the highest level since at least October 2011. The VIX, which is based on options on the S&P 500, tends to rise when stocks are falling and decline as markets rise.”

Questions as to how bad the Coronavirus spread will be, or what the resulting financial ramifications may do to the economy are running through the newspapers and television networks. When health becomes a concern, it’s easy to forget rationality.

There are things to consider when it comes to selloffs. Most importantly, it’s primarily led by investment bankers who are concerned about the long-term profitability of their holdings given the health concern. It is in no way an admonition about the stability of any individual company. Some industries will face losses in this cycle, but we’ve seen time and again that cyclical losses are to be expected.

While it’s never clear how long something like this might last, it’s good to remember that it can’t last indefinitely.