A Few Things I'm Thinking in March 2020

I wanted to get out a few thoughts.

It's ok to say 'I don't know' rather than having an opinion about everything. It's amazing how many 'experts' on Middle East policy came out of the woodwork after the U.S.-Iranian altercation earlier this year. The same can be said about the virus. I think the best approach is to really have no opinion around what is going to play out moving forward, and to take public health guidance from qualified medical experts. "The purpose of the margin of safety is to render the forecast unnecessary." - Benjamin Graham

I am confident that the playbook that has worked for investors in the past will continue to serve them well. Historically, long-term investors have been rewarded for buying and holding stocks in the form of higher returns. I have no reason to believe that will be different moving forward.

Allow for space between a stimulant and your subsequent reaction. The more, the better. 

Context is helpful. This is not the first public health crisis we've dealt with, nor with it be the last. Jamie Catherwood sent out a timely piece last week discussing the implications of the Spanish flu, Cholera outbreak and the Black Death. We've been here before.

Investments don't always recover in the v-shaped fashion we've become accustomed to in recent years. As you can see below, energy stocks have made no money in nearly 15 years. The 'long-term' can be longer than you think.

If you're under 50, this could be thought of as a gift - treat it as such. Consider increasing 401(k) deferrals, start a brokerage account, refinance a mortgage or add more money into your kid's 529 plan. The most opportune times to buy stocks have come at times where it usually doesn't feel very good to do so.

Hopefully your portfolio is constructed thoughtfully and on purpose. A well-diversified, durable portfolio built to survive multiple market conditions is paramount. If you work with an adviser, you have presumably reviewed expectations around portfolio returns (good and bad), so that the downside isn't overly surprising when it arrives.

Stay invested. As I write this, we're nearly 20% off the recent highs, and it happened quick. You've already missed the boat on one end, and will almost certainly miss the boat when it's time to get back in on the other side.

If you have no real investment strategy that is part of an overall plan, DO use this as a kick in the butt to get one. It's much better to proactively dictate how you invest your money as opposed to an incoherent strategy where success is defined only by the current state of the stock market.

I have learned first-hand this week that talking through things helps. Clients want to be heard, and they want to know that you care. The good ones aren't looking for you to have all the answers. But I think they find real value in having an empathetic outlet to speak with. I'm thankful to work with really great people.

I know much of this is unsatisfactory given my first take around having no opinion on how things unfold from here. We'll get through this.

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^Sources:

^{Koyfin Charts}

^{The Fastest Bear Market Ever (Irrelevant Investor - Michael Batnick)}

^{Pandemics in Markets (Investor Amnesia - Jamie Catherwood)}

^{Twitter @Futbolbible}