What Do You Do Now?

Stocks continue their manic behavior, with the Dow posting its best two-day gain since 1987.*

On March 12th, stocks fell 9.5%, which was the worst day since 1987, and put the indices firmly in bear market territory. Over the next seven sessions, the S&P 500 fell another ~12%, making anybody who sold a week earlier feel pretty good about their decision.

But now we’re back to those levels, putting investors who sold two weeks ago in an uncomfortable position. Do they buy everything back today? Do they hope stocks roll over and give them another chance to buy back at lower prices? And if that happens, will they pull the trigger?

I don’t say this to make anybody who sold feel bad, investing is difficult for all of us. I only say this to remind you all in or all out decisions should never be made, ever. And of course, it’s worth pointing out that this could easily be a bear market rally that rolls over.

The point is, with investing, less is more because every decision you make makes the next one harder.

If you sold everything and are now sitting in cash, you’re not starting with a clean slate. You’re making decisions with the baggage from the last decision. Doubt, uncertainty, and anxiety are just a few of the emotions that will cloud your vision.

The past two days are a reminder that waiting for the dust to settle is not a strategy, and neither is anything that is predicated on your ability to see into the future.