Q.  Should I sell my stocks?  The market has dropped a lot and may continue to do so.  Is it better to sell and stay in cash until it recovers?

A.  The recent market drop leads many investors to sell their equities.  It’s a very understandable reaction to the loss of value in your 401k, IRA or other accounts.  However, the decision to sell (or buy for that matter) a mutual fund or ETF should be based on your situation, not the stock market values.  Has your time frame changed?  Did you get married or lose your spouse?  Were you blessed with a recent birth or adoption?  Perhaps an unfortunate change in your health status?  These may be reasons to review your investment allocation, but the COVID-19 market drop is not.

Stocks are long-term investments and we should never make long-term decisions on short-term circumstances.  While the market decline over the last several weeks is real and uncomfortable, it is not unusual.  There have been many such drops over the last few decades.

Financial strains in the last several decades

Consider the last 30 years.  Since 1990, our economy has suffered through: the 1992 recession, the 2000 dot-com crash, the 2001 terrorist attacks, the real estate crisis that started in 2006, the Great Recession from 2007 to 2009, and now the coronavirus pandemic.  COVID-19 wasn’t the only pandemic in that period.  Don’t forget about the SARS, swine flu and Ebola threats.  All of these events happened in the last three decades and many felt then like they do today.

However, consider a simple, one-time $10,000 investment in the Vanguard Total Stock Market index fund (VTSAX) made 30 years ago and then left alone.  No buying or selling for three decades.  You had to go through all of those crises without trying to time when to get out (and back into) the market.  Today, even after the recent COVID-19 drop, that one-time $10,000 investment would be worth over $117,600!

(Chart from Morningstar website)

Life expectancies are long

Some will say, “That’s great, but I’m 65 years old.  I don’t have 30 years to invest. Maybe I should sell my stocks then.”  TD Ameritrade and Morningstar reported that a 65-year-old married couple has a 50% chance that at least one will live to 92 years old and a 25% chance that one will survive until 96.  A 30-year time frame is not out of the question for today’s retirees.

Stay the course

Limit changes to your investing strategy to changes in your life, not the level of the Dow or NASDAQ.  Continue to invest as you normally do.  Re-balance to buy stocks on sale.


John Madison is author of “The Steward Plan,” a Certified Public Accountant, and founder of Dayspring Financial Ministry. He earned a Master’s Degree in Personal Financial Planning (MSPFP), as well as the Master Planner Advanced Studies (MPAS), CRPC (Chartered Retirement Planning Counselor) and AWMA (Accredited Wealth Management Advisor) designations. He has been featured in the New York Post, Forbes, Crosswalk, The Christian Post, Charisma Leader, Chicago Tribune, U.S. News and World Report, Bankrate.com, CNBC.com, among many other media outlets. For more information, visit http://www.dayspringfm.com.