Weekly Market Review - virus market update
Michael Acho
Guardian of the Wealth of the Most Productive People on Earth | Creating, Protecting and Distributing Wealth for Clients
Good afternoon,
Welcome to the infection correction, election protection episode of the WMR. Please wash your hands before reading. The W in WMR stands for Weekly, which means that we only write each week. We don’t pretend to think that we have enough interesting information to publish more often than that. And loyal readers will notice that it’s not nearly every week that we actually review the market because it’s not necessary to review the market every week. Or even every month. A few paragraphs every 6 or 12 months is really all that should be required. However, in this age of 24/7 instantaneous news (fake or not) we cannot stand by without commentary on what seems to be bordering on hysteria about the COVID-19 or coronavirus thing. Clients and friends are calling, and we encourage them to continue, so we thought we’d send a brief WMR supplement.
First, the WMR is not a doctor and doesn’t play one on TV, so we’ll defer the medical impact and medical decisions of the situation to the health care professionals. We’d like to point out that this instance is really the first “social media” virus we’ve ever dealt with. With previous outbreaks, you didn’t get Twitter updates every 15 seconds, which just contributes to the madness. Just our own opinion, but cancelling NBA games and Big 10 tournaments and spring training seems extreme. We have a daughter who’s battled an immune system issue in the past so we understand the abundance of caution, but cancelling the rest of the school year and going online only until the end of April might be excessive. Regardless of the WMR’s opinion, those things are happening and they’re impacting the economy, which is impacting business, which is impacting the markets which is impacting portfolios which is impacting clients, which is what we care about most.
Let’s get some perspective. This is NOT a financial crash. Yes, business will suffer. Yes, profits will suffer. Yes, certain industries and sectors will be affected more than others. But, and this is a huge but, this is NOT a financial panic like 2008-09. This is not a FUNDAMENTAL economic issue. This is, or more appropriately, will be, a short term revenue and profit problem. We won’t know until it’s in the rear view mirror how badly revenue will be hit, but in many, perhaps most, cases it will be temporary. I would define temporary as less than 1 year. Once the insanity calms down, consumers will begin to go back to restaurants and stores, they’ll fly on planes and go to hotels again and economic growth will resume. There will be a quarter or two, maybe three or four, of reduced revenue, reduced sales, reduced profit, but it will be TEMPORARY. The world is NOT going to end. The markets will recover and those of us rational enough to think straight and work the problem will be greatly rewarded for decisions we make now.
So what should we do now? As our first line of this message states, this is the infection correction election protection episode, so off we go.
Infection – Don’t panic. Use common sense, Wash your hands. Use hand sanitizer. Cover your mouth when you sneeze. Stay home if you’re sick. And so forth. And please, please, please, turn off the coronavirus notifications on your phone. Stop watching the news. Stop reading Facebook posts about how this is the end of the world. IT IS NOT. Here are some guidelines from the CDC,
Correction – Don’t panic. Markets are now in bear market territory and they got there with stunning quickness. It was only a month or so ago that they made new highs and have now retreated 20% or so from there. It’s too late to sell, so unless you need the money, don’t. Begin looking for opportunities. I will help with that. Find good companies that have been beaten up unnecessarily. Or even whole sectors that have been pounded. Now is also a good time to rebalance. And it might be a good time to realize some losses for tax purposes. The WMR hasn’t uttered that sentence in a while because there haven’t been any losses to take. If you’ve got some now, let’s book them in order to offset any future gains we might have. If you’ve got resources to put to work, the next 30-60 days will be a very good time to do so. Stop watching the news and stop checking your account value every day. Call me to discuss any of the above.
Election – Don’t panic. Both sides will remain as irrational as ever and blame each other for the virus, the markets, the weather, whatever. The truth is that politicians cause way more problems than they ever solve and they can’t solve this one. The smart health care people will work the problem and solve the virus issue. If the markets are allowed to do what they do, without interference and regulation, they will solve themselves. The election will happen on schedule and we ultimately think that most everything will remain the same. Same POTUS, same senate majority and same house majority. Just our opinion. Turn off the political noise, Twitter feeds and Sunday morning talk shows. Time to Netflix and chill.
Protection – Don’t panic. Consider some guaranteed income strategies, which will provide a minimum level of income regardless of market fluctuations. Consider some “buffered” strategies which can protect portfolios from some downside risk. Consider some protected account strategies which may take some of the worry out of your portfolios. Call me for help.
In summary, don’t panic. Yes, things are challenging and may continue that way for a while. Wash your hands, turn off your phone, order some carryout for the family and stay home for a while. Everything will be fine. And will be fine much sooner than you think. Please forward this message to friends and family you think might want/need to see it.
In closing, we couldn’t resist adding this gem. There was a coronavirus conference scheduled in NY this week, but it had to be cancelled because of, wait for it, coronavirus.
https://nypost.com/2020/03/11/coronavirus-conference-canceled-in-new-york-because-of-coronavirus/
That’s priceless.
LF26 – Don’t panic. We have been here before and made it through. We will do so again. Call me for help.
Have a great week.
The opinions expressed are those of Michael Acho and not necessarily those of Lincoln Financial Advisors Corp. CRN-2992889-031220
Michael J. Acho, MBA, CFP?
Private Wealth Advisor
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Lincoln Financial Advisors/Sagemark Consulting
1000 Town Center, 26th Floor
Southfield, MI 48075
248-948-5100 direct
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