The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price explains.

It's difficult to avoid following the crowd
(Image credit: Michael Duerinckx)

Seven years ago I had the pleasure of listening to Jim Rickards (and others) in the ballroom of the W Hotel in Santiago, Chile. There were perhaps 500 people seated in the room at the time. We were particularly struck by his use of the following thought experiment.

How would you react, for example, if you happened to be there, and then suddenly one member of the audience suddenly shot up out of his or her seat and bolted for the exit, without explanation? Probably you would be intrigued by this development – but you would perhaps be unlikely to act upon it.

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Tim Price is co-manager of the VT Price Value Portfolio and author of "Investing through the Looking Glass: a rational guide to irrational financial markets".