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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