Just last Friday I was telling some of my co-workers how much it felt like the Friday before black Monday to me. I was a few year out of college at the time, but had started investing in high school, so I was “seasoned”. The market had been down a couple says, and when that Friday hit and it fell another 4% or so, I was smart and ready. I did not panic, I “knew” it would pass, no worries. I am not going to be a fool that sells. So I deployed most of my remaining cash and went to bed Friday happy I was so “wise” for such a young investor. That Sunday morning I boarded a plane for DC where I was being sent for a two week software development class for my company. I got up early Monday, went to class, ate lunch in class, and drove back to the hotel without the car radio on. My girlfriend-future-wife called me, and knowing my love of investing asked if I had seen the market. No, I just walked in the door. She told me to sit down on turn on the tv. The DOW was down 22%! Yes, 22% youngsters. That was a day. But it was too late to panic, I figured I missed it by then and I had no cash left to buy with, but at least I did not sell. Spoiler alert, it came back, but that didn’t seem so certain at the time.
Today was nothing compared to that. But we may not be done. If we add a black swan event to this, we could revisit 1987. Not likely. But back then there was a conflict with Iran, missles were fired. Will we get a little North Korea action soon? They seem to want to play nice for the Olympics. Who knows.
Have a plan, be ready. If we close down 1000 points again tomorrow, what is your plan. If this becomes the 10% correction we have not had in an excessively long period, what is you plan? Saul’s plan is simple, it never changes: 100% invested, sell stuff that held to buy stuff you like that seems oversold.
A market correction at 20% seems highly unlikely to me as that is usually kicked off by a recession. The US and world economies are growing, no recession is coming. We got a little spooked and the computers went insane, we are still ok. Just wait until your robot car and robot vacuum cleaner conspire to rule the world, then you can panic.