Good News, New Opportunities and Things We Can Control
It is completely understandable to fear uncertainty. Like most crises (9/11, housing recession, etc.) this coronavirus crisis comes with a lot of uncertainty causing us to feel anxious, overwhelmed, and confused about how to handle our money. The COVID-19 pandemic adds the additional unusual aspect of stay at home orders, causing us to be physically separated from family, friends, neighbors, and colleagues.
In spite of bad news constantly being reported, there is good news and there are new opportunities and steps we can all take to reduce our anxiety and sleep better at night.
Good News
First, some good news. We’re hearing in general that pandemics last between 3 and 5 months, on average. In China and South Korea, it appears that the viral spread is slowing down and may be under control. The majority of major corporations in China are now back to work as new cases have dramatically decreased. And the U.S. is only a few months behind China and is learning from China’s experience.
As each day passes, we’re hearing about new vaccines being developed, improved methods of treatment and medicines, and most infected people making full recoveries. While it is perfectly understandable that many of us are anxious and perhaps even fearful, we must avoid panicking. There are worse things that can happen than ending up with way too much toilet paper at the end of this. Continuing to practice social distancing to flatten the curve and protect those that are higher risk is vitally important.
New Opportunities: What are some things we can do?
First, appreciate the opportunity to spend more time with your immediate family or those you live with. As the father of 3 children under the age of 4, this is an opportunity for my wife and I to be around our children that many parents may never have the chance to enjoy.
Next, create a financial plan, either by yourself or by working with a professional that will put your interests first. This includes creating an emergency fund if you don’t already have one. The reality is things could get worse before they get better. Cutting back on non-necessary expenses and even considering cancelling that vacation you had planned later in the year can give you more peace of mind. In times of crisis, money in your account today is worth more than money later. If you have an emergency fund, this is the time to use it if you need to!
Do not panic and sell your stocks from a decision made out of fear. Remember that in times of crisis, those people that remain calm and do not panic, generally overcome. In the history of the stock market, stocks tend to be more volatile in the short-term, but long-term investors have always been rewarded. The stock market is a self-correcting mechanism and there will be a recovery. Timing is the only question.
If you do have extra cash to deploy, it’s ok to sit tight and not do anything. However, there are opportunities if you have a plan, an emergency fund, and enough in capital reserves. If you are a long-term investor and buy a diversified, broad-based equity index fund now, it will almost certainly be higher in the future. Sure it can go down more in the short-term, but there are many high-quality companies you can buy on sale compared to their prices from just a few short weeks ago. There’s no need to try and time the exact bottom to begin putting cash to work. Consider investing a portion of your long-term, investable cash back into the market over a number of months or quarters to reduce timing risk.
Things We Can Control
The most important thing to do is to be with your loved ones, take care of those at risk, and make a plan if you don’t already have one (or review your plan if you already do). We all get to choose how we respond to the world around us. While it is important to be informed, particularly in these uncertain and ever-changing times, be mindful of where and how you’re receiving your information. If the news or media headlines are causing you additional anxiety, it’s ok to take a break and turn it off or stop reading for a bit. During that reprieve, appreciate what you do have and focus on what you can control.
Stay safe, control what you can control and be well.
Jimmy
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.