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I WRITE THIS FROM somewhere in the Atlantic. We’re headed toward the Falkland Islands, where we’ll apparently see penguins. My wife and I booked this cruise months ago. Since then, of course, we’ve been told repeatedly that being on a ship for 30 days with mostly 60- to 80-somethings is not the best idea. Who knew?
There was a time when getting away meant little connection to the outside world. No more. My iPad and iPhone keep me connected, although it’s my fault that I insist on looking. I’m addicted to information.
This week has been especially trying, as I watch the stock market do its yo-yo act, while coronavirus hysteria runs amok, along with rumors that all cruise ships will be quarantined. Let’s see: Which is riskier, owning stocks or taking a cruise? Oh wait, I’m in both those boats.
One day, I “lose” $100,000. The next day, it’s another $50,000. “Stop looking,” my wife says, after I recount our losses. She’s right, of course, but I can’t help myself. “How come you never tell me on the days when we make money?” she adds.
My logical mind says, “stay the course,” sometimes even “buy now.” That, by the way, is what my wife also says. Then I remind her that we need a new car now that hers is kaput.
I’m well diversified and, even though I’m age 76, I don’t live off my investments. Roughly 60% of my assets are in bonds, including municipal bond funds. But even my diversification hasn’t stopped the onslaught. My most volatile investment, it turns out, is a single utility stock. It’s the same company that once employed me and now provides me with a pension. Logical or not, I have a measure of loyalty.
I make no claim to be an expert. But I feel I’m fairly knowledgeable. I spent decades overseeing employee benefits, including pension and 401(k) plans. Those of us with experience in employee benefits—as well as folks in the investment business—can share our sage advice all we want. But for the average investor, this is scary stuff. We’re being constantly pummeled with information, including headlines designed to grab our attention.
People sometimes think at an emotional level and sometimes they think logically. Right now, it’s all emotion, all the time. We’re worrying about the coronavirus, the stock market and the economy. That’s a lot for people to take in, both everyday investors and professionals.
This is likely shaping up to be a great stock market buying opportunity. But simply pointing that out isn’t enough. Instead, to get people to stand their ground and maybe even buy more, we need to help them with their emotional state—and we clearly haven’t figured that one out. After all, if we had, would we be having days when the S&P 500 plunges 8%? There’s panic in the air, when what’s really needed is courage. I can’t tell you where to find it. But if you’re to survive this bear market, you better start looking.
Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Know Your Demons, Brain Meets Money and Count the Noncash. Follow Dick on Twitter @QuinnsComments.
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Great article. It will be nice to escape from all this madness and watch March Madness instead. Oops.. Oh well Netflix then.
Enjoy your cruise. Your isolation from the rest of the world has most likely reduced your odds of contracting the virus. My wife worked for AT&T before divestiture and finally sold all of her stock this summer, so I can understand your loyalty to your former company (even when Lucent imploded I couldn’t get her to sell her shares in the other AT&T spin-offs).
Full disclosure; I got some courage last night and transferred 20% of stable value funds in the 401k to S&P index funds. Now, after getting back from penguin watching all day I see where the market has gone. I’m not sure I should call it courage any longer. Anyone have any spare fish?
Richard, well written article. I hope you and your wife have a great trip. It sounds wonderful. I look forward to reading about it in the future.
Yes, at some point we’ll likely look back at this as a good opportunity to buy at a good price. I make myself wait 30 days between market transactions. So, in a week my self-imposed market exile is over, and I’ll likely rebalance. I’ll likely over-balance, actually. I will be selling stable value funds to buy stocks.
We have a couple months of reporting to go regarding Corvid-19 statistics and facilities taxed to capacity (but hopefully not beyond). The scope of unpreparedness is just now becoming clear. The WHO has called it “alarming levels of inaction”. Futures crashed last night, and the momentum rolled right into today. I suspect this is not the low, as the news will get worse before it gets better.
Regardless of my opinions about market lows, I’m just going to rebalance per my IPS (which has an over-balancing provision) and keep rolling. The further the market falls, the more aggressive my portfolio will become.
I hope our response capability improves, and we recover in a reasonable amount of time. Good health!