Coronavirus crash: Should you pull out of the stock market?

At a time when we can’t seem to scroll through our social media feeds without feeling stressed, experts advise us to cut back on our news and social media consumption.

“Being tuned in to the 24-hour news cycle may fuel a lot of negative feelings like anxiety, sadness and hopelessness,” said Dr. Jana Scrivani, a clinical psychologist. “Subjecting ourselves to an endless barrage of tragedies and trauma can foster a real sense of being out of control.”

However, for those who have poured their savings into the stock market, looking away from news about the Philippine stocks crashing is impossible. During the second week of March, it plunged 6.8%, the worst since the global financial crisis of 2008.

When markets crash, our first instinct is to pull out to cut losses. But for Michael Manuel, Sun Life Philippines’ Chief Market Development Officer, now is the best time to invest in the market when values are low. “Investing isn’t about today but what it can bring tomorrow,” he said during Bright Talks, a webinar that aims to help clients manage their investments last April 2.

Uncertainties about the coronavirus cause both medical and financial anxieties. “A lot of people are scared and normally, out of fear, decide irrationally,” he said. 

So, before doing anything reckless, take a look at it from a different perspective and understand the economy. 

There are policies in place to support economic activity and recovery if and when we go into recession. First is the fiscal policy action with the allocation of the P275 billion Bayanihan to Heal as One Act for low-income families. This is the largest direct financial assistance program by the government to date. Another action was the Bangko Sentral ng Pilipinas’ (BSP) monetary policy. Last March 24, BSP Governor Benjamin Diokno announced interest rate reduction to encourage banks to continue lending to retail and corporate sectors and ensure cash flow. 

Another reason why we should remain optimistic is that private groups like Coca-Cola and McDonald’s are stepping up to help those who are affected by the outbreak. For Manuel, corporations helping despite a global pandemic is a sign of good financial standing.

Data also show that companies in the Philippine Stock Exchange index such as the Ayala Corporation, SM Prime Holdings, and JG Summit are capable of enduring crises and even become profitable. 

We are still in the early days and we still need to flatten out the coronavirus curve, but Sun Life’s Asset Management Company, Inc. is hopeful because the government and the corporate sectors are in a good place.

However, if you’re still uncomfortable and prefer to pull out of the stock market, you may be taking more risks than you can handle. Maybe you’re a conservative investor but you bought more stocks instead of bonds. If this is the case, then now’s a good time to revisit your risk profile so you can avoid overextending yourself again in the future. “Take a look at it from the portfolio standpoint. If your stocks are allocated properly, you don't have to worry. You’re in the proper risk framework,” he said.

Aside from revisiting our risk profile, staying calm, and letting our investment run its course, here are 4 other tips that can help us stay on top of our investments during this health crisis: 

  • Focus on the value, not the price. Today’s worst-performing fund can be the best performing fund tomorrow. 
  • Take a look at the price going down as an opportunity to buy more stocks at a lower cost. 
  • Make staggered entries into the market. A study says that the stock market generates the biggest returns in its first 12 months of recovery. The longer one waits for market recoveries, the potential for investment returns also decreases.
  • Support our economy’s recovery by following the government’s safety measures such as staying at home to help flatten the coronavirus curve.

What do you think about the Philippine stock market? Would you consider buying stocks now? Let us know by sharing your comments. – Rappler.com

Do you need help in making sound investment decisions? Contact your financial advisor or go to www.sunlifefunds.com

 

 

 

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