Good afternoon,
Another week another lockdown. The state of Michigan went on lockdown as of 12:01am Tuesday March 24. I have read the entire 8 page notice from the Governor’s office. Here is the title, “Temporary requirement to suspend activities that are not necessary to sustain or protect life.” It goes on to say that “residents should remain home or in their place of residence to the maximum extent feasible.” Ouch. Bad enough that we’ve had to work from home for most of the last week already and didn’t really do much, but now we aren’t supposed to leave the house at all. Not fun.
All this shutdown in the name of stopping the virus from spreading further and infecting more people. As I’ve said all along, the WMR is not a doctor and doesn’t play one on TV, but this mandated business and personal shutdown is going to be brutal for the economy. Let’s hope that a shutdown doesn’t cause more ultimate damage to individuals than the problem it’s supposed to solve. I hope that this mandated economic damage doesn’t cause more hardship than the virus itself. See attached for a nice piece about how the cure hopefully won’t be worse than the cause.
I’m still working. I’m still watching the markets and watching your investments. I am making calls and taking calls and emails and messages from anyone who wants to talk at any time. I understand that this is a scary time for all of us, in more ways than one and I’m here to help. Actually, this is the reason I become an advisor in the first place. It’s easy to give advice when the outlook is sunny and the world is humming along. It becomes more difficult, and vastly more important, to stay calm, rational and make the right decisions during a storm. Having done this job for more than a quarter century, I’ve been here before. Financial therapy is more important than ever. I heard a great and relevant analogy this morning. The speaker compared good advisors to fire fighters, not that we physically save lives, but that we financially do. We spend much of our time polishing the trucks and giving tours of the station, but when the alarm goes off, we leap into action. Well, the alarm has sounded. Eventually this will end, people will go back to work, businesses will reopen, the economy will hum again and the markets will recover.
A question that I’ve been getting this month is whether “it’s different this time.” No doubt the circumstances are different, but the public reaction and response are not. It’s different because we have a serious national health issue to deal with, but it’s not different because we’ve had them before. It’s different because the economy is essentially closed, but it’s not different because that’s happened before. It’s different because the markets retreated deeply and quickly, but it’s not different because that’s happened before. What is a little different this time is that we’re getting social media minute by minute updates from a zillion places, some reliable and many not, so the public concern seems to be spreading more and faster than usual. I’m not trying to downplay any of this, and I don’t have my head in the sand, but we will get through this too just like we have every other time in history. It won’t be easy and it may take a while, but we will get through it.
The speaker on the call this morning also reminded us of a book by John Kenneth Galbraith, “A Short History of Financial Euphoria.” https://www.amazon.com/History-Financial-Euphoria-Penguin-Business/dp/0140238565 It describes many of the various financial booms and busts over the course of history. While each one had different causes and appeared across different sectors, from tulip bulbs to junk bonds to dot com crash to what we have today, experience teaches us that the economy and the markets recovered from every single one.
My general advice to investors has not changed, nor will my planning, nor will my process. Review your plan, review your portfolio, rebalance if necessary, don’t sell if you don’t have to and put additional resources to work if you are able. Don’t watch your accounts every day. And please don’t try to time the market or trade the market. Multiple hundred point swings in one direction or the other will whipsaw you until you’re dizzy. There’s an old traders adage which says, markets can remain irrational longer than you can remain solvent. None of us are smarter than the markets, so trust the plan and trust the process and sometime soon, probably sooner than we think, we’ll emerge on the other side of this.
Use this time to control the things you can and set aside the things you can’t. Stay vigilant, stay home, take care of yourself and your family and do some of those things that you’ve been putting off.
In one bit of good news, the government has moved the tax filing deadline from April 15 to July 15. Check with your tax person to see how this may affect you.
https://www.cnn.com/2020/03/20/politics/steven-mnuchin-tax-day-july-15/index.html
LF26 – “The conventional view serves to protect us from the painful job of thinking.” – John Kenneth Galbraith.
Have a great week. And stay healthy.
The opinions expressed are those of the author and not necessarily those of Lincoln Financial Advisors Corp. CRN-3011025-032420
Michael J. Acho, MBA, CFP®
Private Wealth Advisor
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