Don't Sell!!!!!! Part 2

The Dow Jones Industrial Average is down about 33% since its high water mark in early February, putting us well within bear market territory for the first time in 12 years. Plus, we're probably in a recession already and things may get worse before they get better.

So were you stupid to listen to my advice about not selling stocks in my last post about a week ago, right? No, you were smart. You were smart because you didn't lock in a large loss. Sure, our stock portfolios are down a lot, but those are paper losses. Eventually the market most likely will make up for those losses.

Of course there are no guarantees--you know, the old saw about past performance isn't indicative of future returns, etc. But the past is all we have to go on, since none of us can predict the future. And stocks have always performed better over the long run compared with any other investment. But also keep in mind that stock investing should always be about the long run, which means holding them for at least five years, preferably longer, because stock markets can be extremely volatile over the short and intermediate term (like today and the next several months for sure).

Besides, now is not the time to invest in ANYTHING! Bonds are a crappy investments now because interest rates are so low (low interest rates mean expensive bond prices). Real estate is over-valued and also extremely volatile, commodities are for specialists and suckers.

So what if you suddenly come into a lot money through an inheritance or the lottery? How do you invest a windfall in today's financial mess? Stocks are iffy right now because you don't know how low the market will go when it's all said and done, so I'd go with safety. A bank account, money market, short-term bond funds. When things finally get squared away with Covid-19 and the economy starts recovering, then start investing s.l.o.w.l.y in a broad market stock mutual fund. A little each month so that you'll capture most of the market recovery and less of a loss if the market tanks again.

What about gold? A lot of people are investing in gold now because that's what people do in a panic. Gold is tangible, pretty, and a store of value. But compared with stocks, it's a crappy long-term investment. Stocks eat gold's lunch.

Blue Line=Stocks,     Gold Line=Gold.         (Covers March 1990 through today)

(Graph courtesy of macro trends.net)

So, again, this is no time to make major investment decisions. In fact, if you need to liquidate your stocks to get cash, it's a much better idea to, instead, take out a personal loan or draw on your home's equity if you can, because interest rates are historically low. Please, please, please, don't follow the herd and lock in your huge stock losses now.

Your main focus today is to stay healthy and keep your social distance. Try not to think about your stock portfolio. I'm trying to put it out of my mind. Bourbon also helps.