Coronavirus Driving People From The Stock Market
By Michel A. Bell
The coronavirus' stock market impact is immense. It is spooking stock markets. The Dow Jones Industrial Average (DJIA) shed 12% or over 3000 points over five days, February 24-28, the largest 5-day drop since the Great Recession. The DJIA recorded the biggest single day drop (1191) during that week on February 27.
China is a key player in companies' supply chain. That's why analysts fear firms in China won't deliver parts to companies like Apple and Walmart, which will cause these firms' results to suffer. The fear of the unknown is causing panic. Stock markets hate uncertainty, and this virus comes with an abundance of uncertainty: When will there be a vaccine? How will countries contain it, and so on?
Coronavirus' Stock Market Impact Could Linger
Nobody knows how long the coronavirus' stock market impact will last. But history shows us that stock markets over-react and then continue their upward momentum. Today, the rapid proliferation of the virus increases fear, so people are over-reacting. We need to pause and not rush to the exit.
Markets recovered quickly from past viral outbreaks. Will the coronavirus' stock market impact lead to a realized capital loss to you? The market change, per se, does nothing. You lose funds only when you sell below market price. Some firms' results will suffer in the short-to-medium term because of insufficient inventory. Other companies will gain. Although we do not know the virus' severity, judging from past market responses, caution is the key response.
Are you a value investor with targeted companies in your portfolio? Examine your goals and stay the course unless you see changes in the firm's intrinsic value. Have you been speculating, looking to make a quick buck with a margin account? If so, you will have a challenge because banks will call your margin. That's the inherent risk when you use a margin account to speculate.
If you are not a speculator but a value investor, now could be the perfect time to identify value stocks and select those at bargain prices. There will be several. Whoever you are, be cautious, reject the herd mentality, and reflect on these matters:
Stay The Course
Review or develop an investment goal and plan before you adjust your portfolio. Why have you been or do you wish to invest? Your reason will decide your investment strategy. My preferred strategy is to buy blue chip equities with a long history of increasing dividends. I hold these shares, review their fundamentals from time to time, and act when there is a permanent change.
You will find value stocks today. Market fluctuations provide a great opportunity to buy solid companies with good track records. Remember, you lose, or gain on sale only, not when markets fluctuate.
When your investments' intrinsic value change, confirm your strategy, and sell your holdings, even at a loss; don't time the market recovery. The market could be down for several years like the Tokyo Stock Market, which has been below its bubble heights for over two decades.
Don't let generic asset mixes influence your asset allotment between stocks, bonds, cash, commodities. You are unique, and your mix should fit you at your life stage. Think before rushing to so-called safe-haven commodity assets such as gold that has no intrinsic value.
If you are in the retirement red zone, five to seven years to retirement, your goal must be capital preservation, so avoid the stock market.
Don't panic: focus on your goals, plan, long-term strategy. Update these and ensure they fit your needs and your risk profile.
This, too, will pass, but God alone knows the timing.
Michel A. Bell is author of six books including Business Simplified, speaker, adjunct professor of business administration at Briercrest College and seminary, and founder and president of Managing God's Money. For information on business and personal financial strategy, visit
How to Choose the Right Tax Preparer
By Pierre Pinkerton
You can't hide. Every year, if you work and earn a living, you must prepare and file a tax return for the IRS. Also, depending on your state of residency, you prepare and file a state tax return. Just imagine... If HR Block or Liberty Tax did not exist, who would you turn to for preparing and filing your tax return? More than this, how would you go about selecting the right tax preparer? In the tax preparation industry, you often think about:
Is the tax preparer a crook and looking to rip me off?
How do I know if they know what they're doing?
Will they disappear after tax season and leave me high and dry?
In this article, you will find 3 solid and practical tips for helping you select the right tax preparer. Use these 3 tips to reduce your stress and fear. Come away confident that your selection not only has your best interest in mind, but also will help you legally reduce your tax bill.
1. Does He or She Have a Current PTIN?
The PTIN or 'the Professional Tax Preparer Identification Number' is a number the IRS assigns every year for those that charge money for doing taxes. This number is important because you must be approved by the IRS each year to get one. This yearly approval process makes sure that preparers are not in any trouble with the IRS. You can check the current status of someone's PTIN by going to the IRS website and searching for "PTIN" in the search box.
2. Ask About Their Level of Tax Experience
This tip is really important. It's one thing to have a current PTIN, but what's the use if you don't know what you're doing? Ask about past experiences in terms of clients, job history, or even working with the IRS. At a minimum, you desire to work with someone who has either completed a few tax seasons at one of the retail tax franchises like HR Block or Liberty Tax or has gained certain certifications or credentials based on years of experience or passing an exam. Another way to screen tax experience is to ask about specific tax questions you're curious about or have had issues with in the past. They ought to give you a concise and specific response with relevant tax references.
3. What Type of Practice Does He or She Operate?
Lastly, and please don't overlook this tip. Ask about the type of tax practice he or she operates. It's OK to work with those that don't have an office or suite dedicated solely to the practice. In today's market, technology has not only changed the way tax preparers work, but also where. Most preparation services are operated virtually. This doesn't excuse lack of order, professionalism, and accuracy of the tax return. Regardless of where or how the preparer works, you should have peace of mind when it comes to completing the return on time and correctly for a reasonable price; the level of customer service received with an expectation of prompt follow-up; and the ability to contact them when needed during and after the tax season.
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