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What the Financial Media Wants You to Believe

A lot is going on right now in the markets that create risk for your investments. Let's take a look at what the financial media wants you to believe and give you an alternative opinion.


You are a long-term Investor - don't worry about it


That is the go-to answer in times like this by Pop Culture Finance. I heard someone say on CNBC this morning that this would run its course, and we would be "laughing" about this in 6 months. We are all long-term investors. However, that is not a strategy for risk. Instead, understand the risk you are taking. If you are not comfortable with that level of risk, decrease the risk you are taking until you are satisfied.


This is nothing like the Financial Crisis


The experts are right. However, it might be the worst scenario than the financial crisis. The difference between the financial crisis of 2008 and today is the government's options for bailing out the problems. The government was able to bail-out the markets, and the Fed was able to cut interest rates aggressively. Today, the government doesn't have the same options. They can cut taxes and make supportive movements to help soften the blow and mitigate risk. Only a vaccine offers a solution. This creates considerable uncertainty for the market.


There are more Good Years than Bad Years in the Stock Market


During the last bear market, from top to bottom, it lasted roughly 18 months. That 18 months wiped out 13 years worth of investment growth, taking the value of the stock market back to 1996. You NEED more positive years to balance out all of the negative from bear markets.

What you need to know:


This is a trifecta or risk. The price of oil is in a bear market with no end in sight. Interest rates are cratering. Then you have the uncertainty to the economy, consumer behavior, and day to day life of a virus that no one can predict its impact. Just one of these would be enough to disrupt the market.


The Three Rules to Follow


  1. Don't make an emotional decision. Instead, take a step back, assess the risk, and make a rational decision

  2. Know the risk level you are taking and be at peace with it. If not, find our peace with your risk level and adjust accordingly.

  3. Pray about this critical decision-making process and don't make a move until you have God's Peace.


If you need an opinion of the risk you are taking, be sure and let me know - bob@prudentmoney.com