If you have concerns about Coronavirus Covid-19, or last week’s equity market correction, please call your financial advisor. We are happy to talk with you about your personal financial plans.
This correction in perspective
As the financial news has made abundantly clear, equity markets entered correction territory last week. A “correction” is Wall Street speak for a time when US equities decline 10% from their all-time highs.
Corrections are commonplace. The average intra-year decline is around 14%. The current correction may reach that average. Or it may not. Either way, it is not pleasant to look at your current account balance during these times. A national news broadcaster called this a “no good horrible very bad” week. And it’s true, this correction was much faster than normal. But it sets us back just a few months. Equity valuations are back to numbers last seen in November, October, or perhaps September of last year.
What are we doing?
We are monitoring your portfolios. We are in this alongside you, invested just like you are. Over this last week, we have spoken with many of our managers. We will speak to more of them this week. We are asking them questions similar to the questions you may have for us. Some of their thoughtful responses follow the end of this Periscope.
In your account we may soon make a visible change, or we may make less visible changes. When we make decisions, we continue to use our time-tested and rational processes. We diversify by strategy. We follow an academically-rigorous philosophy. We put your financial well-being ahead of our own. This is our fiduciary promise to you.
And, of course, we are available to talk with you at any time.
What can you do?
Facing a potential pandemic is one of the single most scary things we could do, ever. Looking at a map of the world full of red blotches, growing larger, is terrifying. Thank you for your courage.
It’s normal to feel scared, worried, and/or angry during a correction. Remember, we survived nearly twice the current correction near the end of 2018. Soon thereafter equities would soar to all-time highs, yet again. That is easy to forget because it went by so fast.
No one knows how long this correction will last nor how deep it will go. In the end, neither the depth nor duration of this correction is going to determine your long-term, real-life financial success.
If you are in the accumulation phase of your financial life, consider adding more to your equities, to the extent that you are able. If you are withdrawing from your accounts, remember those investments that are not linked to equities.
If you’re considering tax planning, perhaps even a Roth conversion or contribution, this may be your opportunity. And if you’d like to reduce taxes in 2020, you may have a good opportunity to harvest some tax losses now—to offset gains this calendar year.
You may want to ask your financial advisor for a “What are you afraid of?” scenario analysis. You’re certain to have an honest, and likely very comforting, conversation.
What Matters Most
Here is what works for growing and protecting real wealth during good (and stressful) times. We begin by understanding your values, goals and relationships. From here we form your financial plan. Then we carefully construct your investment portfolio. The investments are determined by your financial plan, not by current events, not even Covid-19. As scary as a disease is to our health, it could be even worse to our wealth if we act out of panic.
First, let’s talk. Ask your financial advisor about your unique situation, and any changes that may or may not be prudent. We have links on our website to make scheduling a phone call simple and fast. Thank you for your trust in our team.
Thoughts from some people we trust: