What if there was a year that started with the market hitting new highs after a prolonged bull market and the economy seemed to re-accelerate? What if there was a virus that came from the East and spread to the rest of the world? What if governments around the world closed their economies by imposing a lockdown and all citizens had to shelter-in-place? What if the stock market then dropped 34% and entered into the fastest bear market ever seen and the economy entered a recession? What if during those market sell offs the market declined so fast that the different indexes stopped trading as soon as they opened as market circuit breakers were activated? What if the Federal Reserve stepped in and supplied the market with unprecedented liquidity in the trillions of dollars? What if Congress spent trillions of dollars to help people and businesses by sending every eligible citizen a direct check? What if during the turmoil in the economy and healthcare system, civil unrest broke out at a level not seen since the 60’s? What if during the unrest, new causes come out such as Black Lives Matter and other social justice issues? What if during this difficult time we had the biggest fires in the West burning millions of acres and hurricanes in the east flooding many states in the east and south coasts? What if people and businesses implemented new technologies so that workers could work from home, new trends and technologies matured quicker, and the market indexes hit new highs within months from lows of the bear market? What if it was a presidential election year with a divided nation that went into a difficult election? What if the nation had to replace a Supreme Court judge as one of its most dynamic and influential members passed away?
That year is 2020 and no one knows how the year will end. What I do know is that investors who had developed a comprehensive plan- a plan which considered the possibility of a difficult year- stayed the course. Investors that panicked and stepped out of the market struggled to get back in and now must try to make up lost time. I do not know what the next 6 or 12 months will bring; however, after three bear markets that occurred in 2000, 2008 to 2009 and 2020, investors that stay the course in a well-diversified portfolio following their financial plan should successfully reach their goals such as retirement. In times like these, two quotes from successful investors provide me continual guidance. First, Peter Lynch said, “More people lost money waiting for a corrections and anticipating corrections that the actual corrections” and secondly, Warren Buffet was quoted saying “The stock market is a device for transferring wealth from the impatient to the patient.”
This is not the first time the economy has experienced difficult challenges from geopolitical crisis, whether it is a world war or regional crisis, political crisis, such as impeachment or hyperinflation or deflation, and it won’t be the last. We need to keep in mind that the stock market will always find its way to new heights while wealth is preserved and made over the long haul.
The one thing we all learned from this year is that we don’t know what is coming. However, there are steps you can take to manage your risk and develop a comprehensive plan that will allow you to stay the course. Schedule a complimentary review with me today and help reduce the uncertainty of this year. https://go.oncehub.com/LeoMaheras