A big difference....

The market has been upside down for the past month and the panicky gyrations are continuing. I'm pretty sure those active FOMOs in chasing highs prior to this epic market meltdown are also those most actively chasing down (a kind of FOMOs as well). They probably just sell anything in panic, feeling the end of the world is coming. This kind of mentality and sentiment swings really underscore why most of the people in the market will lose money over time. One typical behavior for general investors is to blindly sell all the stocks and move the money into the presumed safe haven, bonds. It may make people feel good for a while but in the end, this usually leads to a drastic underperformance over time. See the interesting chart my friend has sent me, which vividly presents the difference of the one year performance in the past two health crises (SARS and Zika) between those who sold during the meltdown and moved to bonds vs those who stayed on the stocks during the painful period. Sure you can argue this time may be different but I doubt as a whole, we will see a different outcome after the crisis passes.

 

Just to be clear, I'm not talking about individual stock risk management. For any trading stocks, one needs to have a clear exist strategy with a predefined plan to sell if necessary, e.g. a stop loss. This is an important part for safely managing a portfolio. What I'm talking about here is a general concept where people may just blindly sell during panicky period like now. For example, some people may just move all their stock funds in their 401K to bond funds for safety. This kind of mentality and action will most likely result in significant underperformance for their portfolio over time! Don't be one of them. Only act rationally and stick to your predefined exit plan instead of doing anything emotional.

Before I finish, let me share some positive news regarding the ongoing battle with the coronavirus pandemic. See below about a new FDA initiative with more details via the link: 

As part of the Trump Administration's all-hands-on-deck approach across public, academic and private sectors to combat the COVID-19 pandemic, the U.S. Food and Drug Administration stood up a new program to expedite the development of potentially safe and effective life-saving treatments. The program, known as the Coronavirus Treatment Acceleration Program (CTAP), is using every tool at the agency's disposal to bring new therapies to sick patients as quickly as possible, while at the same time supporting research to further evaluate whether these medical countermeasures are safe and effective for treating patients infected with this novel virus.

I must say I'm really impressed by and will applaud for Trump's political courage in personally intervening and influencing the FDA to move to the right direction by removing the unnecessary red tapes. As a physician with a deep knowledge of drug development, I know how critical and rightful it is for the FDA to do this in speeding up the treatment development process, which may save months of time to allow patients in critical status to be able to be treated effectively. I don't think any other presidents in the past had anything near the audacity that Trump has in challenging the notorious political correctness in fighting for the sake of American people's interests. I think history will prove that what Trump is doing now may save tens of thousands of American's life at the end. 

WELL DONE, PRESIDENT TRUMP!!