Nobody Likes a Stress-Test… Until It’s Over

Stress-testing your financial plan is never fun or easy, but it’s good knowing that your plan will hold up. Market corrections are going to happen, as evidenced by the corrections we are currently experiencing. Can’t you just see the emotions kicking in and causing people to make poor decisions regarding their investments? Keep in mind that whenever someone is selling their stocks at the market lows, there is someone buying them thinking that they are going to move higher.

The market is hovering at more than a 20% downturn as I write this note. The word from the “experts” is that the blame can be placed on the uncertainty of the economic impact of the Coronavirus, seasoned with the Russian/Saudi Arabian oil production conflict. This is quite a stress-test we are going through right now, isn’t it?

Well, take a step back, look away from your account balances, and focus on the number of shares you own, and the dividends each share pays. If anything, you may now own more shares due to the reinvesting of dividends since your last statement, and to the best of my knowledge, no company in the dividend portfolio has reduced its dividend payment. That’s good news! Your accounts are still generating the income that you were counting on back in February, before your stress-test began.

It is certainly understandable for those investing with a focus on growth, yet needing to liquidate positions for income, to feel enormous stress and uncertainty due to the market’s current volatility. Their investment philosophy is not handling this stress so well right now. And I’m certain you are feeling some stress as well. But after taking a deep breath and seeing that your income is still being created, hopefully your stress is at a much more manageable level that won’t lead you to emotionally driven decisions.

We believe that the market will bounce back and do so relatively quickly and strongly. This country has weathered viruses before and will likely have to do so again in the future. And if it’s not a virus, there will be other events to spook the market and stress-test everyone that is participating in it.

Hang tough, don’t listen to the negativity out there! And continue to give thanks, because we are living in the greatest country in the world, and our future continues to shine brightly.