More Money Podcast - What's Going on with the Stock Market (and How You Should React) - Money Minute with Jessica Moorhouse

Episode Date: March 13, 2020

So...what the heck is going on with the stock market right now? Because everyone is freaking out from all the headlines, Twitter hashtags and conversations around the water cooler. Here’s the thing, we are currently experiencing a market correction, not a crash. That being said, this market correction could lead us into a bear market, which means interest rates and stock prices may sit at a lower point than we’ve experienced for a while. That’s okay. It’s part of the natural market cycle. We’ve had one of the longest bull markets in history, so we were overdue. The key thing to know is not to panic. Make sure you have an investment plan and are sticking to that plan. Make sure you continue to practice dollar-cost averaging and are still contributing regularly to your investments (do not hit pause!). Do not sell off everything because you’re afraid. That’s how you lose money. You make money during a correction or crash when you don’t sell, or if you continue to buy at discounted prices. To learn more, I highly suggest you check out my Investing Foundations for Canadians course. But no matter what you do, don’t panic, don’t make decisions based on fear and emotions, and continue to educate yourself about investing so you can feel confident about what you’re doing. To check out my course visit https://jessicamoorhouse.com/investingfoundations Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to another Money Minute episode with yours truly, Jessica Morehouse. I am, of course, going to be talking about what the hell is going on with the stock market because everyone is freaking out and I got no time for that. Y'all should be smarter than that if you listen to this podcast consistently. So what's going on right now is currently we are experiencing a market correction and it's looking like we are also shifting from a bull market to a bear market two terms that you would you know totally understand if you took my investing foundations for canadians course but anyway um so things are happening with the stock market and people are freaking out because

things have been consistently going up for a very long time. And so because of the coronavirus, because of what's going on with oil that happened on Monday, people are just running around like headless chickens. You know that imagery? I don't know why I said that. That's a terrible image to think about, but that is kind of what just came to mind. And that is not a smart, savvy thing to feel like or to react as an investor, as someone who listens to this podcast and wants to better themselves. What you need to do first and foremost is to calm down. You need to stop listening to the noise. Of course, it's important to be informed and know what's going on. But if you're spending all day reading news headlines or on Twitter, following the hashtag market crash, you're probably not going to feel so hot after, you know, at the end of the day and not be able

to sleep and dream about what's going on with the stock market. Not okay. So first, number one, you need to calm down, maybe limit how much you are reading the headlines and Twitter to like once a day or something like that. Then also, hopefully you already have an investment plan. Maybe you're using a robo advisor or you have a professional, you know, working with you, or maybe you're a self-directed investor and you build a plan before you started actually building your own portfolio. In whatever case, hopefully you already have an investment plan and guess what you should do? Stick to the plan. Stick to the plan. For instance, if you're using a robo-advisor and you've got those auto

contributions on to participate in dollar cost averaging, which I highly recommend, don't pause them. Don't hit pause on those. Keep on investing because as you know, right now, things are dipping, which means you are investing in a basket of stocks or ETFs that are pretty much on sale. So keep on doing it. And if you really do want to participate in the buy low, sell high, but you are afraid of making a mistake or you're afraid you're not going to buy at the right time, well, that is true. You may. These are true things that could happen. You may make a mistake if you don't know what you're doing and you most likely will not buy at the bottom because no one knows where the bottom is. Not even the super smart investing experts. No one can predict that. So again,

this is why dollar cost averaging is probably one of the best strategies out there because you're going to be buying at different points. If it keeps on going down or if it continues to go up, you're going to be buying at lots of different intervals. And hopefully maybe you will hit the bottom or at least close to the bottom at some point with those auto contributions to your investments. So number one, calm down. Number two, continue to auto contribute to your investments. Number three, I also want to share that because I mentioned, oh, you know, right now everything's on sale basically in terms of stocks. This is a great time to buy. Don't just start buying things though. If you, again, do not have an investment plan, if you do not, like there's nothing wrong with buying individual stocks. I

feel like I've said that a lot on this show. However, make sure you understand what part of your portfolio, what percentage for buying individual stocks or even speculative stocks. Is it 5%? Like make sure, I think typically people say, you know, limit it to 10 or 5% of your portfolio. So you don't accidentally, you know, make a big mistake and just dump a ton of money into, I don't know, Amazon stock. And then something happens with Amazon and your whole portfolio just like lost half its value because you put all of your money into that one stock. You want to keep diversified, remember? So there's nothing wrong with playing around, buying some individual stocks right now because they're on sale. Make sure you know specifically what your kind of budget is. And don't go crazy. Again, do your research and understand that it is still risky to invest in

individual stocks and you may lose money. So just understand what you're doing. But again, there's nothing wrong with it. I'm doing it myself and it is what it is. So just understand what you're getting yourself into. Lastly, I want to remind you that no matter what happens, whether we do experience another recession, who knows? Again, things will recover. This is what happens no matter what. If there's a market correction or a crash, things go down. They eventually go back up. Things will recover. And so the only way that you can really make sure that you are protecting your future and your investments is if you don't do anything crazy like liquidate all of your equities. Don't do that. Don't sell everything now and buy a bunch of gold and keep your money in cash. That would be dumb. Don't do that. Just relax. Again, participate in dollar cost averaging. Continue with your investment plan.

If you don't have an investment plan, this is the time to really look into building one. And don't go crazy on buying those individual stocks. And remember that even though we're experiencing this kind of low, look at the chart from the past six months. We've been at record highs for a very long time. We were kind of overdue for a shift to a bear market anyway. So just remember, this isn't forever. This is temporary. Things will eventually recover. So relax. Everything's going to be fine. Maybe if you don't feel super confident, I would highly recommend picking up a book like the little book of common sense investing, which is a really good one, or a millionaire teacher, any kind of investing book that will reinforce the things that you already know because you've been listening to this show.

So that is it for me on this money minute. Calm the F down. Everything's going to be fine. Don't make any decisions based off fear and emotions. Make sure to be logical and really know what you're doing and maybe just limit how much you're watching the Google News section or on Twitter or whatever. Just check yourself a little bit. Just check yourself. Okay. That is it for me on this Monday Minute. I hope you have a lovely weekend. On that note, everything's going to be fine, guys. Everything's going to be fine. You heard it from me first.

But I will be back here next Wednesday with a fresh new episode for the Momentum Podcast. Until then, have a great weekend. I will see you soon.