The phone didn't ring, and that is a good thing

Feb 26, 2020 | Jeremy Goldfarb


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The past 2 days (today is Wednesday Feb 26th 2020) have seen the worst collective market drop in 4 years on the US indicies. Many of the global markets are not that far behind or ahead either. The true impact of COVID-19 is working its way into the minds an hearts of investors, and I don't think that is wrong. There will be a true impact (see my other post this week for more on that), and it will affect broad based production, consumptions, and ultimately GDP.

 

As an investor though, the best thing to do when the knife is falling so quickly, is to stand pat. The best thing to do as a trader is what traders always do, and that is add to the froth by entering and exiting positions at a furious pace looking for odd instances of arbitrage and margin to boost short term portfolio performance. Despite what they will all tell you (traders that is), it rarely, if ever, works at all. Not a sustainable practice in terms of actual investing in my humble opinion.

 

With that said, companies with real value will emerge on the heels of a pullback, correction etc. If you are an investor, you need to identify these businesses, determine what you would be willing to pay for them, and invest in them if the pricing has improved relative to your overall business case. Global events are historically transient as they relate to health scares so I am definitely keeping an eye on companies we really really want, and we will buy them.