‘Free Fallin’ – I wish I was referencing the Tom Petty & the Heartbreakers song…
The market has been an absolute mess for the last couple of days.
I liken the feeling that we have been feeling this week to one I used to feel when we would practice emergency breakaways in the AF. The aircraft would drop suddenly, and your stomach would end up in your throat.
Sure, it felt weird – but most importantly, eventually you stopped.
When this will stop, I have no idea, but at some point, it will. To circle back to what I mentioned earlier this week, I wanted to take the information that has been floating around in the media and add some context:
– As I alluded to this earlier this week, we have a crisis of confidence which has been exacerbated by our elected representatives. Several times this week the president has had the opportunity to offer reassuring words to calm the markets and basically laid an egg each time. Even as I write this, he is sitting in the Oval office with the Irish Prime Minister casting political blame, and as he does so, so go the markets.
– 0% Payroll Tax Cuts will be unimpactful. For this to work, people need to be able to spend these dollars to prop up the economy. They can’t do that if they are staying at home.
– There are no safe havens. Volatility has hit everything.
– What would calm the markets? A plan first and foremost. Specifically paid sick leave, a specific plan for dealing with the coronavirus (i.e. testing kits), and support for businesses heavily impacted (whether it be through government backed lending, etc.). Today’s NY Federal Reserve action is important towards injecting liquidity, but again is not targeted enough.
– What can you do? Again, look at your allocations. If you are contributing money to a bond position in your portfolio, perhaps you re-allocate 100% of NEW contributions towards the equity portion? If you contribute annually to your IRA, perhaps consider establishing a monthly contribution to not only break up the amount over a 12-month period, but also to remove the emotion and buy incrementally.
Do not sell. This would be so devastating to your portfolio that you may never recover. In 2008 I had a client liquidate his entire portfolio during the heat of the moment, and I doubt to this day he recovered. The odds that you will hit it right on the downside and the upside are not in your favor.
And congratulations…by doing nothing, a lot of you just bought the downturn without even knowing it, because some of your securities may have recently paid out dividends, and you may have re-invested them.
– Support your local small businesses. These folks are going to feel the brunt of it, so do what you can to support them.
– Write down 3 things you are grateful for and have your spouse do it as well. Focus on this during these times of volatility.
In regards to the virus itself, I reached out a very good friend of mine who teaches Physician Assistant students anatomy. If anyone is going to give me a straight answer it is him. And this is what he said:
‘The Panic itself is going to cause more damage than the virus’
Seeing the way that people and the markets are responding I don’t think he will be wrong.
Finally, I would like to thank those of you who have been checking in with me to make sure I am ok. I appreciate the kind words, and trust me, no one is more frustrated than me. When pettiness gets in my client’s way I will speak up, as I did yesterday at the Disney shareholder meeting when I asked CEO Bob Iger to please run for president because we need a leader. He appreciated it, he told me, but the biggest thing was that I did that to advocate for you. He demonstrated leadership that the markets are yearning for right now and there has been long standing rumors that he stepped down to possibly do this.
That is why I am asking you all to please contact your congressional representatives and demand action. Things have hit a new level on the ‘stupid’ meter and they need to hear from you directly:
Financial Recon 