Jordan emailed me an interesting question regarding giving advice during a bear market that really hit home for me.
What do you say to someone who has completely lost faith in this falling
market? If they’ve lost their ever loving minds and now think there will be
bank runs, CDIC insurance won’t work, and they are too scared to invest in
anything with any amount of risk.
Do you try to help out your family/friends or keep your investment
knowledge to yourself to avoid possible blow back?
My rule of thumb is to never give advice unless it is asked for. So even in the scenario of a family member/friend losing all faith in the markets, it is probably due to losing a bunch of money in equities over the past year. The last thing they want to hear is someone telling them what to do after the fact.
However, if I was asked what I thought of the current market crash, I would tell them what I’ve been writing about here. That is, although this may be a significant market correction, the markets will recover. Every major bear market in the past felt like the end of the world, but the markets have always bounced back. So if you’re invested for the long term, I personally would hang tight, and even consider buying when opportunities present itself.
In addition, this market is a true gut check for new and seasoned investors alike. Market conditions like these reveal your real risk tolerance. If the current volatility of the markets is causing you to lose sleep, then it’s time to review your equity/bond asset allocation and adjust accordingly.
So that’s what I would do in this situation. What would you do?