Life’s a roller coaster and periodically, events occur that disrupt everyday life, business and markets – and it’s advisable to get help in navigating them. COVID-19 (Coronavirus) continues to spread and its impacts are significant. Aggressive efforts are underway to “flatten the curve” – to reduce its spread and not overwhelm the frontline healthcare professionals and emergency responders – and each of us has the responsibility of self-reliance and taking care of ourselves and family.
We don’t know how deep the impacts and how long they will run. However, at some point they will eventually end. Thus, we position first to survive, and second to prepare for the rebound. Below you will find answers to several common questions among our clients to help you navigate the challenges that exist and those that will develop. Hopefully, these questions will help trigger discussions you should have with your family, colleagues and trusted advisors regarding your specific situation.
Are We Going to Be Okay?
Anxiety is high and it’s okay to be scared. Fight or flee is part of our DNA and there is an urge to “do something” in times of stress. “Being okay” is different for everyone. Yes, it’s scary when wealth temporarily goes into hiding as markets correct, or when your employment may be at risk. Now is a good time to focus on why you’re investing. Your goals might include to retire and stay retired, have choices and options, spend more time doing the things you love, or being financially independent and not being a burden to anyone. Often the discussion then shifts from a stressful financial or investment concern to become one about getting more comfortable again, that eventually things are going to be okay, and the action plan is relevant to those goals.
Should I Move to Cash?
Distinguish between the need for liquidity and the urge to bail out to stop the pain. If it’s because your job is in jeopardy or there’s a buy opportunity because your item goes on sale, then that’s why you have emergency reserves safely socked away in a Federal Deposit Insurance Corporation (FDIC) insured account. On the other hand, if it’s the fear that the markets will go to zero then take a moment and reflect. Assuming your goals haven’t changed, why toss out a well thought out investment plan? History tends to repeat itself – bull runs last longer than bear markets and getting out often means missing out. And despite the pain, the U.S. equities market still stands some 3-1/2 times higher than the low coming out of the 2008 Crisis (S&P 500). However, if you had the wrong investment plan to achieve your goals or to allow you to sleep at night, then consider waiting until we hit dry land again – may be bad timing to abandon the life raft (hopefully of diversification) and to jump into the water.
Is It Time to Buy?
The cable news was on one screen showing the world on fire. The other computer screen had analysts excited with exceptional companies selling at cheap prices. Aristotle’s concept of the golden mean says that the truth may lie somewhere in the middle. While there are plenty of uncertainties including the coronavirus, economic recovery, U.S. presidential election, and more – low prices may offer a good entry point for investable cash. Less than a month ago, the equity markets were selling at all-time highs and the economy was relatively solid. Banking cures are in place following the ’08 Crisis, households are less leveraged, and unemployment was low.
Other Issues? We Are All In this Together
These include business adjustments (supply shifts, cancellations, postponements, or other demand shifts), working remotely, and job security to name a few. Self-isolation and social distancing also generate other issues. Stay connected socially (healthy dosage of phone conversation); it’s okay to turn off the news, and take walks in the sunshine.
Most importantly, don’t forget to wash your hands, often and thoroughly. If you spread anything, spread help, compassion and humor. Don’t panic. Like all outbreaks, this too will eventually end. Wishing you safety and shields. Secure a healthy future both personally and financially.