THIS SHALL PASS—just not as quickly as any of us would like.
I’m talking about the bear market, but the same sentiment applies to both the coronavirus and the economic slowdown. Indeed, the three are inextricably entwined, with share prices the twitchy indicator that tells us the mood of the moment.
Amid the swirl of news—the latest fatality count, the unemployment claims, the Dow’s daily action—it’s easy to get unnerved and start second-guessing our investment strategy.

IT’S A SCARY TIME to own stocks. But for long-term investors who want their portfolio to clock significant gains, there’s simply no alternative.
To be sure, you could throw in your lot with the market-timing crowd, who are currently hiding out in bonds and cash investments. Their plan: When we get the final climactic plunge in share prices that sends the market back to valuations not seen in four decades, they’ll swap into stocks and ride the next bull market to astonishing wealth.

ON WALL STREET, there’s a story—apocryphal, I suspect—that’s told about an old trader, a young trader and the 1962 Cuban missile crisis.
Old trader: “They say this could lead to nuclear war.”
Young trader: “So we should buy bonds, right?”
Old trader: “No, we should buy stocks. If we don’t get war, the stock market will rally. And if we get a nuclear war, it won’t matter what we own.”
Today’s pandemic won’t lead to nuclear war (except perhaps in the Oliver Stone movie version).

IT’S OFTEN DIFFICULT to fathom what causes the stock market to rise or fall. The market doesn’t always reflect how the economy is currently performing—and sometimes the disconnect can seem huge.
This sentiment was captured in a recent MarketWatch headline: “‘The world is more screwed up’ than the stock market is currently reflecting, warns billionaire investor.” The article was reporting on comments made by Oaktree Capital founder Howard Marks, who told CNBC, “We’re only down 15% from the all-time high of Feb.

INVESTING IS A GAME of subtraction—and I’m not talking about this year’s stock market decline.
Wall Street sells the fantasy of market-beating returns, using it to seduce investors into adding new stocks and funds to their holdings. Result? Performance-chasing investors cobble together badly diversified portfolios that they imagine will beat the market, while overlooking the hefty costs that Wall Street charges. This is a strategy that’s almost guaranteed to make heaps of money—for brokerage firms and money managers.

THE GREAT RECESSION and accompanying stock market plunge didn’t seem so bad to me. At the time, I was a 20-year-old college student with a little money in a Roth IRA that I’d opened and funded since my high school days. Sure, it was no fun losing half my investment account, but it wasn’t a lot of money—at least compared to today.
In the years since, I’ve fallen squarely into the super-saver category, socking away a large portion of my income.

I HAVE A BIG PROBLEM with a small word. But before I get to that, I’ll start with a little bit of history.
In his book The Success Equation, Michael Mauboussin tells this story: Back in the 1970s, a Spanish man won the country’s biggest national lottery, called El Gordo—the Big One. Awarded annually at Christmastime, it’s the rough equivalent of our Powerball. In this particular year, when the winner was interviewed,

IT’S BEEN AN unpleasant seven weeks for the stock market. Is it over? I have no clue. Still, last week’s rally offered investors at least a temporary respite. My suggestion: Use this moment to think about the market’s recent rollercoaster ride—and how you’ve handled it emotionally.
Financial experts distinguish between risk capacity and risk tolerance. It’s a useful distinction. Risk capacity is our objective ability to take risk based on our personal situation, notably the reliability of our paycheck and our investment time horizon.

HERE IS WHY I DON’T trade, and don’t make big market bets, and why you shouldn’t, either.
Headlines last Monday at 6 a.m.: Nation Braces for Brutal Week, At Least a Fourth of U.S. Economy Goes Idle, British Prime Minister Boris Johnson Hospitalized.
Headline at 9:30 a.m.: Dow Surges as Tech Stocks Rally
I got spooked last weekend. It was epic. I was actually scared after days of hearing about the bungled federal response to the pandemic and about states fighting over medical supplies.

I MET WITH MY financial advisor last week to discuss my portfolio’s performance in the first quarter. This was the first time I’d looked at my investments since the start of the public health crisis and economic shutdown.
My portfolio, with a target mix of 35% stocks and 65% in bonds and cash investments, was down 6.8% for the quarter, while the S&P 500 was off 19.6% and the Dow industrials fell 22.7%, including reinvested dividends.

THE PLOT, THE SCRIPT and the characters may have changed. But we’ve seen this movie before.
The current stock market swoon strikes many folks as unprecedented: It’s the frantic financial sideshow to a devastating global tragedy—one that’s seen 1.1 million people fall ill and 60,000 die, with every expectation that the numbers will be many multiples worse before the COVID-19 pandemic is over.
Yet, on closer inspection, 2020’s bear market doesn’t seem so different from earlier market declines.

ALTHOUGH THE 2020 market plunge isn’t even six weeks old, there are already lessons we can learn from this financial crisis that can help us better manage our investment portfolio. Here are six takeaways from the current downturn, which has left the S&P 500 off 25% from its Feb. 19 high:
1. During a financial crisis, you often hear the phrase, “Stay the course.” It’s meant to encourage investors to stick with their financial plan during difficult times.

BERKSHIRE HATHAWAY Chairman Warren Buffett, in his most recent annual report, described an event that occurred at a Berkshire subsidiary last year. Late one night, a fire spilled over from a neighboring business, resulting in significant damage to the Berkshire facility, forcing it to shut down.
Fortunately, no one was injured and, as Buffett notes, the losses will be covered by insurance. Problem is, one of the company’s largest insurers was, as Buffett put it,

THE PAST FEW WEEKS have brought back memories of the 2008 financial crisis. Back then, stocks were at bargain prices, but I had little money to invest. Today, my financial house is much stronger—and I want to be ready to buy if stocks get dirt cheap.
I’ve already made some portfolio adjustments. But from here, my plan is to keep an eye on stock market valuations. A large percentage drop by the market averages might—by itself—create the false impression that stocks are cheap,

I’M DETERMINED NOT to repeat my mistakes of 2008-09. I was ruined by that financial crisis or, more accurately, I let it ruin me. I led into it with my chin.
I’ll spare you the details of my personal situation in the years leading up to the crash, but the upshot is I was egotistical, financially reckless and looking for a big score. As the crisis unfolded, I piled risk upon risk, mistake upon mistake.