The great 2020 stock market crash (and recovery) has taken investors on a wild ride from all-time highs to crashing lows and back up to new highs; all in a matter of six short months. For those pursuing a lifetime of successful investing, it is important to reflect on this historical time period, taking in the valuable lessons that the market has to offer.
What are your thoughts on the speed of the 2020 market recovery? Are there any major differences to 2008 and prior recoveries?
The speed of the 2020 stock market crash and the subsequent recovery were the fastest in market history. There is often a phrase investors toss around saying, “sell the rumour, buy the news,” and the run we’ve seen has definitely been heavily influenced by rumours and investor perceptions.
A major difference between this market correction and other major market moves is that the fed has announced an unlimited amount of ammunition essentially available to help prop up the economy.
What advice do you have for investors looking to protect their dollars from inflationary pressures?
Historically, a diversified portfolio of high-quality, blue-chip, dividend-paying stocks has been the best way to protect against inflation – not gold or other precious metals. Keeping your capital invested is incredibly important as inflation ravages away the value of cash over long periods of time.
Do you have any advice for long-term investors concerned about a possible second market correction?
Take your time horizon seriously, and don’t sweat the bumps along the road – equities go up over time. If the market does retract a little, don’t panic. Look at it as a buying opportunity.
Quote of the Month:
“The real key to making money in stocks is to not get scared out of them.”
– Peter Lynch