When most people hear the term “March Madness,” basketball is what immediately comes to mind. But, as much as I enjoy basketball, March Madness better describes the world’s current mental state, particularly regarding the financial markets.
I don’t pretend to be a medical expert, but fear of the unknown seems to have taken control of our lives. And the fear is clearly moving faster than the virus itself.
But history has shown us time and time again what happens when people make major decisions during periods of uncertainty, fear and anxiety. More often than not, they regret their decisions later.
As a seasoned financial advisor who has guided investors through stressful times in the past, I’m not suggesting we dismiss the severity of our current situation. But I do get a certain degree of comfort and confidence when I turn to history for guidance.
I don’t believe most people want to see their health issues and worries addressed through a red or blue political lens. The microscope of medical experts is much more reliable.
The numbers show that the longest bull market in our nation’s history has ended. The question is, will the economy flounder for an extended period, or do we have a once in a lifetime buying opportunity?
I certainly can’t predict the future, but I do tend to be optimistic. The fact that investing has so many unknowns is the primary reason I emphasize diversification. Unfortunately, the current financial storm reaches across the board.
Already low interest rates on bank deposits are falling lower. Bond yields have tumbled. Technology stocks. Blue chips. Essentially all stocks have fallen off a cliff. Even non-traditional investments like gold are not faring well.
As an optimist, I’m hoping for a bounce back, but regardless, we must all work our way through these uncertain times. I’ve often referred to “needing an iron stomach” in times like these. You can add to that the need for a level head. This is not an environment in which you should be making major changes to your financial positions.
It's also vital to listen to and follow the advice of our medical experts.Earlier this month I was scheduled to attend a conference featuring some of the top financial advisors from across the country. But the conference was cancelled the night before my flight. This resulted in empty seats on airlines, cancelled hotel rooms, and convention workers left with no event.
In other words, fear driven by the Corona virus has us worried about more than just our health. It’s created economic fall-out throughout the nation and around the world.
All of the previous downturns I’ve experienced have been driven by some sort of economic development. The housing crisis during the great recession of 2008 is a good example. This is the first time I can recall a downturn fueled by a major health fear.
It may turn out different this time, but at the end of the day I think those who can keep their fear at bay will be rewarded for their patience.