During times of market volatility, remember investment basics
By David Spika
GuideStone Financial Resources
During the last week of February, U.S. equity markets experienced their biggest one-week decline since 2008, with the S&P 500 Index falling nearly 13%. The sell-off was sparked by growing fears about the coronavirus, officially known as COVID-19.
Markets have remained highly volatile in March as the virus has continued its spread through Asia, Europe and the United States.
It can often appear that stock markets are reacting to minute-by-minute headlines.
Given that stocks had a surprisingly powerful rally in 2019 and we are now in the 11th year of the current bull market — several years longer than the historical average — financial market volatility should be expected.
Furthermore, the stock market has historically experienced an average 10% decline during presidential election years. So the recent downturn is not out of the ordinary.
If the coronavirus, oil weakness or some other unforeseen catalyst puts significant downward pressure on corporate profits, continued selloffs in the market are likely.
What began as a supply shock driven by Chinese factory closings has the potential to evolve into a demand shock if consumers and businesses continue to curb activity (e.g., drastically reducing travel, canceling events, self-quarantining, etc.) and spending.
We believe the widespread fear currently permeating markets has increased the potential for a recession in the next 12 months.
Market sell-offs can be dangerous for long-term investors because they can trigger fear-driven “market timing” impulses to sell out of positions. History has shown there’s a real cost to trying to time the market.
GuideStone encourages investors to remember these four basic principles:
- Always focus on long-term objectives, not emotions. Especially for retirement participants, these assets are intended to serve needs for a long period of time. Make sure objectives and actions are consistent with the time horizon.
- Avoid making impulsive decisions. Making changes based on short-term market moves has a higher degree of failure, as it promotes buying high and selling low. The performance of an account moving forward will be determined based on results of the financial markets in the future, not the past. Investors cannot sell yesterday’s losses or buy yesterday’s gains.
- Don’t count losses (or gains). Consistent contributions to an investment account or retirement plan afford investors a systematic way of taking advantage of investment opportunities as markets ebb and flow.
- Maintain realistic expectations about market behavior. Financial markets in the short term tend to fluctuate in response to social, political and economic events. However, historically, the markets stabilize and return to profitability over the long term, focusing on the underlying fundamentals.
Volatility can be unnerving, but markets have historically rewarded a long-term focus and a diversified investment approach.
Investors concerned by the market’s recent moves should look at their portfolios and ensure they are appropriately diversified. Active investors who believe they have too much equity exposure relative to their risk tolerance and long-term objectives should consider whether it makes sense to explore less-volatile asset classes.
However, this should be done in an attempt to better align asset allocation with investor goals, not in an attempt to time the market. During times of uncertainty, it is important for investors to remain committed to their long-term investing strategy.
EDITOR’S NOTE — David Spika leads GuideStone Capital Management and serves as executive vice president to GuideStone Funds. He also sits on the executive leadership team for GuideStone Financial Resources and chairs the firm’s Faith-Based Investing Committee.
God gives the increase
By Mark Tew
President of Judson College
Recently I met with a group of students to discuss the completion of a service project. I asked, “How many degrees does it take to boil water?” They looked around in silence, knowing this had to be a trick question. After clarifying whether I wanted the answer in Fahrenheit or Celsius, they replied, “212 degrees.”
“Wrong,” I said. “It only takes one degree to boil water — the 212th degree to be exact. None of the first 211 degrees can boil water. It always takes the 212th degree.”
What followed was a wonderful discussion of how the outcome of ministry is rarely known in its fullest extent. When working to accomplish God’s purposes, we will not know if we are the first, middle or last person in the process.
The ministry we start may take many years and many other contributors to bring the desired result to conclusion. Conversely, any given person may be the one who gets to see the result.
Paul told the Corinthians that neither the person who initiates nor the person who culminates is relevant: “I planted, Apollos watered, but God gave the increase” (1 Cor. 3:6). Our focus must always be on God accomplishing His purposes through our lives.
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Letters to the Editor
Concerning your article on Sunday evening worship services in the March 5 issue of The Alabama Baptist, to me the model for Sunday evening worship is not biblical.
God started the sabbath at sundown the night before the sabbath with families gathering at a meal in preparation for the next day. The sabbath ends at sundown with everyone able to prepare for the new week.
We complicate things by paying little attention the evening before.
We stay out late and do little preparation for Sunday (the sabbath). Consequently, we limp into Sunday morning.
Then we stay out late on Sunday evening and limp into work on Monday.
If we want to change what we’re doing, how about leading in rediscovering a biblical view of the sabbath and structuring our time properly.
We could structure activities for families on Saturday evening. When God has a plan and reveals it, we should follow it.
Richard Hitchcock
Trussville, Ala.
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“As this virus brings the world to its knees, we as a church minister from our knees.”
Pastor Mitch Kim
Wellspring Alliance Church, Wheaton, Illinois
If the Church — with all its brokenness — would focus on showing grace, then we wouldn’t be able to hold all the people.
Terry Newberry
Douglasville, Ga.
Last night I picked up my Bible for a very late devotional reading. I have been reading through Genesis and came to chapter 16, and God reminded me of one of His names as revealed in Scripture, El Rio, or The God who sees me. That verse was medication to a weary soul. Last night I needed a reminder that in the midst of struggles and difficulties, I serve a God who never lets me out of His sight. He is the God who keeps His eyes on me. He sees my good times, my bad times, my joy and mourning. This world can make you feel invisible and insignificant, but remember, God sees you. My Abba Father will not take His eyes off of me, His child. What a great comfort!
Kevin Blackwell
Birmingham, Ala.
Churches seeking to provide a welcoming place for people with disabilities should begin by finding out from those with experience how they can improve. Everyone deserves a church home. Jesus asks us to care for those in need, not only those in poverty, but those in need of fellowship, friends and support. We must show those who walk through the world differently from us that we have thought about them and have made room for them. It’s not their job to pave the way. It’s our job to make the way easier for them first.
Jamie Sumner
Disability advocate and author of “Eat, Sleep, Save the World”
We’ve been able to help people see, especially believers, with an eternal perspective. The Father’s hand is still in this. He’s still good, and we’re still under His hand. I’ve just been thinking through how easy it can be to complain in situations like this. But God has taught me, just as He taught the Israelites walking through the wilderness, that He’s still good, He’s still sovereign and there’s still things to cultivate gratitude for.
IMB worker in East Asia
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@drjamesmerritt
The #CoronavirusOutbreak gives all Jesus followers a divine opportunity to display to the world how to respond rather than react. So today I choose worship over worry. I choose faith over fear. I choose peace over panic believing in a
sovereign God who gives saving grace 24/7.
@shadesmtn
Jesus didn’t create you to settle. He created you to love you and for you to enjoy relationship with Him, where you follow Him to greater opportunities and greater challenges, all for His glory and our good.
@JackieHillPerry
In Exodus 24, Aaron saw God. In Exodus 32, Aaron made a golden calf. I asked myself, how could someone see God, be so near to Him as to glance at His feet, and then turn around and worship a god that is no God at all. And then I remembered, I’ve done it too.
@DGrantGaines
The Lord gave me the opportunity to lead someone to Christ at lunch today. I pray that God always helps me remember that the ministry that happens inside the church building’s walls is just preparation for the ministry that’s supposed to happen outside the church building’s walls.
@Stu_Davidson
Are you often offended? Are you repeatedly repulsed? When your day initiates, are you already irritated? The Christ follower should be slow to speak and patient when provoked. God has given you grace and wrapped you in matchless mercy. Remember, give grace because one day, you will need it yourself.
#pastorponders #trustinhim
@DL_Staples
What was true for Israel is true for us. “Only take care, and keep your soul diligently, lest you forget the things that your eyes have seen, and lest they depart from your heart all the days of your life. Make them known to your children and your children’s children” (Deut. 4:9).
@RobertAtCCC
“Oh God, You are my God. And I will ever praise You. I will seek You in the morning, and I will learn to walk in Your ways. … And step by step You’ll lead me, and I will follow You all of my days!”
@RichMullinsSays #FollowJesus #MakeDisciples
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