The economy is collapsing. What do I do with my portfolio?

While the economy’s freefall is somewhat uncharted, what you should do is the same as it’s been since the first stock market in the 1600s: Very little, if anything. Here’s why.

Yes, it’s frightening to see your monthly statements drop like a peregrine falcon dive-bombing lunch, so I implore you, DON’T LOOK! Just like when they predict a hurricane where I live, I check weather updates on the NOAA site only twice a day. The media exists these days to make you look and they do that with hysteria and fear. Be better than that.

Here’s what the experts recommend. Look what’s happened in the PAST two months and adjust, slightly, accordingly. No one can predict the future, not even provide an accurate guess. No one knows, particularly now. Therefore, you shouldn’t make any changes about what’s happened in March until the end of April. It’s going to change about a bazillion times in the meantime. Don’t think you can time the market, you can’t. No one can. If someone makes a prediction, they’re just pulling it out of their nether regions. Who wants advice like that? Not me. Not you.

As a fellow financial advisor tells his clients, “when everyone is running around, the best thing to do is to stand still.” Excellent advice for investing and in life.

It’s tempting to grab your money and run, but don’t. If you stay invested, the market will go up in time. It always has. Yes, it might drop a few more times, but you won’t know because YOU’RE NOT LOOKING! Not until the end of April!

Heck, I’m not even going to tell you what you might do in April because you might try to do it now. Nope, I’m not falling for it. I’ll tell you later.

If you sell your investments, you have no future growth. But you’ve absolutely guaranteed yourself some losses. Don’t do it.

Here are two scenarios.

In 2007 Sandy and Susan each had $100K in their 401ks. Then they dropped 40 percent to $60K. Sandy panicked and moved that $60K to a money market making 2 percent interest. Susan stayed invested with XYZ Corp and reinvested the dividends, which averaged 2 percent over that time.

Ten years later, the S&P is up 65 percent from that trough. Sandy has about $73,170. Susan, who was reinvesting dividends and thereby buying more shares while they were “on sale,” now has $156K, more than twice as much.

There are a lot of assumptions in there regarding share prices, inflation, etc., but the point remains. You stay, it pays; you leave, you lose. 

Is it scary now? Heck yes! I’m scared, too. But I have an investment plan that was designed with downturns built in. This is just one of them. Hang in there, you know what you’re doing. You’re doing nothing. Smart girl!