Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 374

Four simple things to do right now

This is a challenging time for investors. While stock markets have recovered from their late March 2020 lows, there are signs the impact of COVID-19 and nervousness about the US election are worrying markets. The S&P/ASX200 index has fallen in each of the last four weeks. The tech stocks that have run the hardest and supported the broader index have spluttered with a 10% correction in the NASDAQ in the last two weeks. The market is facing the reality that a vaccine is unlikely in 2020.

Here are four things to help in navigating the sea of news.

#1. Take responsibility

How we respond to coronavirus matters.

It’s not what other people do in times like this that create problems; it’s what we do. There are no ‘other people’. It’s true for our investments, and it’s also true for our mental health right now.

Panic is a social phenomenon, whether it’s panicked selling of investments or panicked buying of hand sanitisers. Sure, there’s an underlying trigger, but our actions and our tone have the power to either turn that trigger into a crisis or into a blip that we quickly see in the rearview mirror.

Personally, as a contrarian investor, I try to identify buying opportunities when there’s a down market. Rebalancing as a tactic also helps counter the crazy. By buying when others aren’t, we help limit the carnage, in our small way. And that helps real people avoid potentially dire situations.

As many studies at Morningstar and beyond have shown, people lock in their losses by pulling out at the bottom of a down market. It’s not the stock market decline itself that hurts them per se. It’s that they exit and then miss out on the subsequent market upswing.

That’s a serious loss for retirees living off their investments or young families planning for their first house purchase. It means cutting back, living on less, and perhaps not even being able to pay the bills.

Buying when others aren’t helps decrease the chance that people will panic and pull out, and it softens the blow if they later do. Keeping our heads and thoughtfully evaluating our investments means, ever so slightly, smoothing things out for everyone else.

Steve Wendel is Head of Behavioural Science for Morningstar.

#2. Use volatility to point you in the right direction

Use the volatility that you've seen in your portfolio as a gut check. If you feel that your portfolio value has fluctuated too much, that probably means that you're taking on too much risk.

Consider using all the attention and energy that the market turbulence has brought out in you to take the time to reconsider your risk tolerance and recalibrate your long-term asset allocation decision, or the mix between stocks, bonds and other asset classes, and ensure that it's appropriate for the level of risk that you can comfortably take on as opposed to making a short-term tactical change in your portfolio.

Ian Tam is Director of Investment Research at Morningstar.

#3. Do not try to time the market

Although it sounds easy, pulling out of the market and then waiting for a correction is something that very few people and investors can do effectively and consistently. My colleagues, Dr. Paul Kaplan and Dr. Maciej Kowara have authored a few papers around this topic. For one, they ran a study of about 304 Canadian equity funds over a 15-year period ending October of 2018 and found that on average, there were only eight critical months of performance that a fund's history depended on to beat its own benchmark. Of course, if you weren't invested during those critical months, you too would have failed to beat the benchmark.

So, investing early and staying invested over the long term is really the only way to ensure that you catch these critical months. The path to financial freedom is a marathon and not a race.

Ian Tam is Director of Investment Research at Morningstar.

#4. Use time to your advantage

The airwaves are saturated with coronavirus coverage. Buy, sell, hold, don’t panic, panic, get supplies, wash your hands. What should you do?

Only time will tell what the best moves were and when, but one thing that we strongly encourage at Morningstar is that you use time to your advantage. That means first avoiding ‘un-doing’ the power of time in your portfolio by panicking. Quality investments have seen dramatic drops in value in the past, and they’ve recovered. And depending on your retirement goals, that may mean that the red you see today could be a flashing buy sign for certain stocks in the long game. You won’t know when markets hit the bottom, and you won’t know when a bump is a bull trap.

Go with what you know. The rules you set for yourself and the power of compounding and diversification remain constants amidst the chaos. Pair this with reliable sources of information and you’ll find less of a reason to panic about your portfolio when it comes to this pandemic. Save your energy to focus on what matters most: the health of you and your family, friends and neighbours.

By Andrew Willis is Content Editor at Morningstar.

This article is general information and does not consider the circumstances of any investor.


Try Morningstar Premium for free


 

  •   12 September 2020
  • 3
  •      
  •   

RELATED ARTICLES

How do your financial priorities stack up with our pyramid?

Choosing your investment strategy is like a road journey

Four checks for a financial fire drill

banner

Most viewed in recent weeks

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

How inflation is quietly moving the goalposts on retirement

Inflation doesn’t just raise today’s bills - it quietly increases the amount needed to retire, while simultaneously making it harder to save. Three steps to take before June 30th to improve retirement outcomes.

Back to the future - Why indexing CGT is a good idea

A return to indexation of capital gains would be a fairer way to compensate households for the effects of inflation than the current discount. Importantly, it opens the door to future, broader reforms to stop the taxation of inflation.

Latest Updates

Investment strategies

High quality businesses are on sale

Beneath the dominance of the ASX's largest stocks, much of the market has been left behind. High-quality companies are now trading at levels rarely seen, offering opportunities for investors willing to look deeper.

Investment strategies

The whirlwind is upon us

Something unusual is happening in markets. The winners are pulling further ahead at an extraordinary pace. As return dispersion hits extreme levels, volatility is rising and the investing landscape is becoming harder to navigate.

Strategy

Inequality destabilises economies

Extreme wealth concentration is no longer just a side effect of growth. As inequality deepens, its consequences are shifting from a social concern to a broader threat to economic stability and democratic resilience.

Investment strategies

Have AI’s four horsemen arrived?

AI exuberance is colliding with economic reality. Cracks are emerging as spending surges, ROI remains uncertain and enterprise behaviour shifts. The next phase may look less like an expansion and more like a reckoning.

Taxation

Budget tax changes only scratch the surface. Here are 4 reforms Australia needs next

The 2026 budget has reignited Australia’s tax reform debate, but more work remains. Beneath the surface lies a harder question: what structural reforms are needed to make the country's tax system fit for the future?

Taxation

Negative gearing: quarantined, not killed

The Budget's negative gearing changes defer deductions rather than deny them, yet a worked example shows quarantining can halve the tax benefit's present value for buyers of established dwellings.

Investment strategies

Family offices have quietly taken over Australian private capital

In just four years, Australia's private capital landscape has transformed. We are seeing changes across who deploys capital, how deals are structured and why new platforms and investor pathways are rapidly emerging.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.