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7am Saturday

March 14, 2020

Good morning! I hope you are well. We can be glad the week is over. So much bad news and very little expectation of good news. This week we came face to face with the fastest bear market in history.

Oddly enough, the week also included March 9th, which is the eleventh anniversary of the bottom of the bear market of 2007-09.


Market & Economic Update

+ This week marked the end of a 10+ year bull market. The S&P 500 had a full week of some of the largest market moves in history.

Here’s how the week went for the S&P 500…

  • Monday: -7.60%
  • Tuesday: +4.94%
  • Wednesday: -4.89%
  • Thursday: -9.51% ==> Closed in bear territory.
  • Friday: +9.29%

…overall, the S&P 500 finished this week down -9.97%.

On Thursday the S&P 500 closed down about -27% from its all-time high on February 19th making this an official bear market (defined as a decline of 20% or more).

In times like this, we frequently hear that some find it difficult to stay committed to an investment program when fear has gripped the financial markets.

As we all know by now, the drivers of this decline have been:

  • (a) the outbreak of a new strain of coronavirus (COVID-19), the extent of which can’t be predicted,
  • (b) the economic impact of that outbreak, which is equally unknown, and
  • (c) the onset of a price war in oil. Oil prices lost nearly 25% on news that Saudi Arabia was dropping crude oil prices and raising production as well. (Lower oil prices are a problem for everyone involved in the production of oil, but beneficial to those of us who consume it.)

The common thread here is unknowability: we simply don’t know where, when or how these factors will play out. And in my experience, the thing that markets hate and fear the most is uncertainty. Although we have no control over the uncertainty, we can and should have perfect control over how we respond to it.

Or, even better, how we don’t respond. The last thing in the world that long-term, goal-focused investors should do when the whole world is selling is – you guessed it – sell.

That doesn’t mean I haven’t done a few “double takes” at my computer screens, as I’ve watched major swings in stock prices and movements in the bond and crude oil markets.

Like always, I am here to help you and your family answer any questions or concerns you might have. Yes, I really mean that. I am choosing purpose over panic. I want to help as many of my loyal readers as I can. So, whatever decisions you’re considering, I’d be honored to support you through them. Just hit reply to reach out to me anytime.


My Appearance on The Invested Dads Podcast

Due to recent news and events related to the Coronavirus and oil price shocks, Josh and Austin invited me to join them for a special episode of The Invested Dads Podcast.

We covered a lot of ground in this podcast which was recorded on Friday morning. Some of the topics we discussed include:

  • updates to the status of the virus
  • the impact to the economy
  • our expectations for the extent of the bear market
  • the impact to your financial plan
  • and much, much more!

Click here to see the shownotes and listen on the podcast’s webpage.

Or, you can listen to our discussion on any of the major podcast platforms including:


Your Weekend Resources

🖋️ Stay On Top Of New Changes To Investors With Retirement Accounts & 529 Plans: 5 Ways the SECURE Act Impacts Everyday Investors Like YOU! (The Everyday Advisor). “2020 introduced more than just a new decade – it introduced sweeping new rules regarding retirement savings. What you may not realize is that these new rules could easily impact YOU!”

🤝 In Agreement: “Uncertainty shrinks your field of vision at the worst time. When the world changes in a 24-hour period it becomes hard to think more than 24 hours ahead. The year ahead is impossible to envision when assumptions you had at breakfastime were destroyed by dinnertime. The irony is that long-term thinking is most powerful when everything is falling apart. The majority of long-term results are determined by decisions made during a minority of times, and right now is one of those times. It’s a tragic moment to become short-sighted.” – Morgan Housel


The next 3 or 4 weeks are going to be unlike anything we’ve experienced in modern history. Take care of yourself. It’s during times like this that we learn to appreciate the many things we often take for granted. There will be a lot of positives that come out of this pandemic. We will get through this. And, we will be stronger for it!!

Thanks for reading!

Have a great weekend,

Adam

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