On the Milan Stock Exchange the rain of sales that began following the spread of the coronavirus in Italy continues. After the -11,25% recorded in the sessions from 24 to 28 February, the Ftse Mib continues to suffer: from 2 to 6 March, the main index of Piazza Affari lost 8,77%. The balance of the last two weeks is therefore merciless, with a red of 20%. Things are no better on the other European stock exchanges, all characterized by sharp declines, while Wall Street has managed to contain the losses and Shanghai has struggled to raise its head.
This the balance of what is happening on the stock market in the time of the coronavirus. From the streets, panic has moved to the markets, leading many investors to wonder what to do to protect their savings. Sell low? That doesn't seem to be the right answer. It is too late and there would be a risk of colossal capital losses.
Before making any decision, the Moneyfarm Observatory reported by AdnKronos suggests relying on behavioral finance, a field of study that helps to understand the behavior of savers, but also what actions to take in a high-risk period like the current one.
"Acting on impulse and panicking are the most common mistakes who commit themselves in such situations but are also the ones who do the most damage to our savings ”, explains the study, underlining the importance of acting rationally and lucidly, avoiding that anxiety from the coronavirus gets the better of it.
The Moneyfarm analysis reported by the AdnKronos agency then moves on to a practical example, showing the trend of two identical portfolios belonging to as many investors who have decided to behave in opposite ways. The first "came out in conjunction with the four main market downturns (September 11, Sars, etc.) of the last ten years and then returned after the respective recoveries". The second, on the other hand, “never divested because he preferred to let the storms pass on the markets”.
Well the first portfolio (that of the investor who chose to leave) recorded a 35% lower return than the second (that of the investor who decided to stay).
"Practically, it did no good to avoid losses in the short term: exiting the markets in this case led to the loss of around 60% of the portfolio's growth”, the analysts comment.
Indeed, the Moneyfarm Observatory underlines how staying still and avoiding risky moves during the most difficult periods is the right choice but above all the one that pays the most in the medium to long term. "For this reason - the analysts conclude - the choice to remain invested is the best vaccine for our savings at the time of the coronavirus".
