Many of our clients are calling this morning to ask questions about today’s sudden halt in stock market trading. Fears over coronavirus sparked a market panic. For 15 minutes on Monday, the entire S&P 500 was shut down to let the market cool off after a stomach-churning 7% slide in a matter of minutes.
Stock markets rise and fall… but sometimes it happens very quickly! It is markets like these where safe-haven assets like gold and silver can show their worth in dampening your volatility and preserving your good night’s sleep.
Here are answers to the common questions we are hearing:
COULD A MAJOR STOCK MARKET CRASH OCCUR NOW?
In 1987, investors suffered through a 22%+ plunge in a single day. Imagine that… 1/4 of your retirement balance is wiped out in a single day. While everyone hopes this will not happen again, market science tells us that it could.
WHAT IS MY BEST DEFENSE AGAINST MARKET PANIC?
Diversification is the classic defense against market volatility. Safe-haven assets like gold, silver and platinum are widely considered by financial experts to offer excellent diversification benefits alongside traditional stocks and bond investments.
WHAT HAPPENS IF THE MARKET SHUTS DOWN?
There have been examples before of markets shutting down: for two days after Superstorm Sandy, for example. 9/11 also triggered a market closure on Sept 17, 2001 because of fears of panic selling. Hopefully, if the market has to shut again, it can be reopened safely without sparking a wave of selling. Investors can be unpredictable and the market can move fast against you.
ARE THE STOCK EXCHANGES PREPARED FOR VIRUS PANIC?
There have been only a handful of times where the markets fell prey to unexpected closures, besides the examples above. In 2015, the New York Stock Exchange suspended trading because of a tech error. In 2013, there was a trading freeze on the NASDAQ that lasted several hours because of tech problems. So, for now the current policies in place seem to have kept the markets up.
WHAT HAPPENS IF THE TRADING PERSONNEL GET SICK?
In 2014, the SEC enhanced emergency preparedness policies. In addition, many trading companies are now set up to allow remote working as needed, if people need to isolate to stay healthy.
Here at American Hartford Gold Group we recommend Precious metals as a diversification strategy and many experts believe a balanced portfolio with up to 20% in Precious Metals is adequate for most investors.
We urge our clients to do their own due diligence and if precious metals makes sense for you give one of our account executives a call to see how we can be of service.