By Gary S. Williams, CFP®, CRPC®, AIF®
Published in the Baltimore Business Journal on April 2, 2020
I have been a financial advisor for 25 years and thought I had guided my clients through the worst market we would ever experience during the dot-com bubble burst in 2000 and 2001. But just six years later, the Great Recession, which felt like a Category 5 hurricane, made the previous bear market seem like a passing shower.
And yet, while the Great Recession was terrifying and financially devastating, it now feels like a distant memory in the midst of this crisis caused by the coronavirus pandemic.
I have spent the past week speaking with clients to make sure they and their loved ones are safe and healthy while also ensuring they are not in financial panic mode. Many of these calls included misplaced laughter as we tried to reassure each other. There is a certain comfort knowing everyone, including the most seasoned investment managers, has been blindsided by the COVID-19 virus and that we are all going through the same thing.
So, what did I tell clients to reassure them? I let them know I am committed to helping guide them through these unchartered and treacherous waters. As a pragmatic person, I told them I don’t know when the health crisis or economic catastrophe will be over, nor do I know when the markets are going to bottom. Nobody knows — not your financial advisor, the CNBC expert guest or your friend.
As for what I have been telling my clients about their investments and the markets:
First and foremost, you need fortitude, defined as mental and emotional strength in facing difficulty, adversity, danger or temptation courageously. Smart investors know selling stocks now is the worst mistake they can make, and trying to time the market is a fool’s errand. Hold on tight and know it is going to be a bumpy ride.
I know it can be difficult watching the market go down day after day, more than you could ever imagine. Yesterday I was speaking with my brother, a former Navy SEAL, and he reminded me of a saying the SEALs have: “The only easy day was yesterday.” My interpretation of that for this situation is that fortitude will help you face each daily challenge head-on and equip you to weather the storm.
Second, in the middle of a crisis, the scenario and prognosis may seem bleak. You could easily go into a dark place and rationalize the worst outcomes. Don’t. I am not saying to put your head in the sand and ignore reality, but I am saying that panic is going to cause stress, and stress reduces your immune system. Staying positive and optimistic is better than being negative and pessimistic.
Third, invest strategically if you have dry powder — for example, by investing excess cash over and above your cash reserve or short-term needs. Another strategy is rebalancing your portfolio to the original asset allocation, like selling fixed income securities relatively high and buying stocks low.
However, don’t push all your chips in, and know you are not going catch the bottom. Be mentally prepared that the investment you just made is going to go down further and you may have to invest good money after bad to average into the market. This is a tough situation, and it requires a strategy, research and a disciplined approach. This situation could make a sane person torture themself.
Events like this pandemic will be forever etched in our minds, and we will share our story with future generations. Our lives will likely be different for some time — possibly for quite a while — but they will return to normal eventually. We will hopefully find a cure or vaccine. We will eat in restaurants and go to movies again. We will get back to life in a way that resembles the world before COVID-19.
Remember to practice fortitude, patience and keep a positive mindset. Stay invested and, if possible, invest more wisely.
Let the CERTIFIED FINANCIAL PLANNER™ professionals at Williams Asset Management help with your wealth management needs. Whether you need comprehensive and holistic financial planning or investment management, we can help! We are fee-based, independent financial advisors located in Columbia, the heart of Howard County, Maryland. Schedule your complimentary consultation today by calling 410.740.0220!
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