A Market Perspective on Coronavirus with a Sprinkle of Gratitude

(Photo | Courtesy of Rosell Wealth Management)

As the world around us experiences greater turbulence from COVID-19 health concerns and consequently market fluctuations, there is potential for fear and anxiety to take hold in our minds. As a financial advisor for the last 20+ years and having experienced three bear markets, I’ve come to recognize the emotional patterns that result from the inevitable cycle of the markets. I would like to first share with you some thoughts and ideas that have helped me navigate my emotions through uncertain times, followed by my viewpoint on the markets to help bring some needed perspective to what we are currently experiencing.

• Uncertainty can drive people inward, making them feel isolated and helpless. I suggest going in the opposite direction by expanding your connection with others whether it be by phone call, email, text or an old-fashioned handwritten card. I have found that the more people contribute to others the less they’ll worry about their own situation. Become a source of confidence for your family and friends.
• Many feel saddened with cancelled trips, plans and events. These disappointments can either defeat you or reveal new strengths. What if you treated today’s challenges as a time when you could make the greatest progress as a person? How can we do this as a community?
• The most consistently successful people I have met, know there is so much out of their control — but they continually work towards how they respond to life’s unexpected events. Anytime there is fear, uncertainty and discomfort, it’s an opportunity to creatively respond to unpredictable situations.
• When times get tough, we either make a decision to gripe or to be grateful. In an environment where negative sentiment is rampant, the consequences of this decision are much greater. Grumbling only attracts negative thoughts and people. Gratitude, on the other hand, creates the opportunity for the best thinking, actions and results to emerge.

To help me remember to be grateful, I often carry a gratitude stone. What is a gratitude stone? It’s a small stone that you carry with you in your pocket or purse or leave on your table. The idea is to put it in a place where you are likely to come in contact with it throughout your day. Each time you see or touch the stone, it will act as a small reminder to be grateful. I find this to be most beneficial during challenging times. Think of it as your tool to attract good thoughts, as I believe that what we think about expands. I highly suggest you find a stone that resonates with you, as it may help you get through these interesting times. You will get through this!

John Maxwell states, “The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails.” A profound message for the challenges we all are currently facing. Let’s look at a market perspective.

The words “market correction” and certainly the word “recession” have become taboo in current times. Investors don’t like to think about markets heading south, and if you only started investing over the past decade, you have never even experienced a downturn. Let’s start by discussing the Coronavirus, which has quickly become the leading market concern around the globe. Let’s look at the meaning of the word “DIS-EASE.” “DIS” means “without.” Dis-ease: “without ease.” And investors have certainly not experienced ease as it was a terrible few weeks for the stock market to say the least! The three major stock indexes posted their worst weekly percentage drops since the financial crisis, as Coronavirus fears caused significant investor anxiety. The Dow Jones Industrial Average recently experienced its worst one-day point drop in history. I feel the overall impact can be summarized by the following major variables:

• How many cases of Coronavirus will there be globally in 2020?
• How long will the Coronavirus continue to spread before the disease is fully contained?
• How deep and wide will the global economic impact be in economic activity?

The first two points are nearly impossible to predict. The third bullet point is where I focus my attention: How deep and wide will the global economic impact be on economic activity? Certainly, this impact will go beyond affecting beer sales for the Mexican beer with a similar name. I’m a realist and yes, the Coronavirus will have significant repercussions that we’re already witnessing as restaurants and other businesses are mandated to close their doors. There’s a lot of moving parts to say the least, however, let’s take a longer-term perspective on this Black Swan event. In case you’re not familiar with the term, a black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact and the widespread insistence they were obvious in hindsight.

In my first book Failure Is Not an Option — Creating Certainty in the Uncertainty of Retirement, I share that economic recessions have occurred all throughout the history of our modern economy and always will. Forbes states we average a recession every 8.8 years and we have experienced ten recessions be­tween 1945 and 2020. When we take the historical perspective that there has never been a down stock market that has not bounced back to hit an all-time high, it becomes that much easier to deal with challenging days in the markets that we are currently experiencing.

I understand that staying calm amid market turmoil is not easy and fears of further decline can make you feel skittish. However, this is absolutely the wrong time to panic and throw in the towel and here’s a real-life story to demonstrate this.

Back in 2011, I was introduced to a new client who shared his perceived success story. In an excited tone he explained how he liquidated his entire equity portfolio in October of 2007 when the Dow was near its peak-closing price at that time of just over 14,000. He went on to give details about how the Dow hit a market low of 6,443 on March 6, 2009, having lost over 54 percent of its value since the October 2007 high. I congratulated him but went on to ask him when he had reinvested his retirement funds back into the market as the Dow had climbed more than 125 percent at that time from its recent low. In a dejected tone he stated, “The markets had been just too high to invest in and I’m waiting for them to retreat before reinvesting.”

Had he remained invested; his assets would have grown considerably. I explained that by attempting to time the market, he would have to be lucky, not just once, but twice; once to withdraw from the market and another to get back in. The odds of accomplishing such a feat are not favorable. This point is even further reinforced when we contemplate that even after this current historical downturn, as of March 24, 2020, the Dow is still up 261 percent since the last market low in 2009!

When you time the markets, you have to be lucky twice. You must not only get out of the markets at the right time, but you need to get back in at the right time. This gentleman was lucky once but not twice, and consequently faces a serious dilemma. To be successful over the long term, it’s all about time in the markets and NOT timing the markets that counts! I’ll say it again: It’s all about time in the markets — not timing the markets.

Here in Bend, right in the middle of the city, we have the conical shaped outcrop called Pilot Butte. It has a sinuous road that wraps around this volcanic cinder cone that takes hikers and drivers to the top. Visualize a cute boy with a baseball cap on who’s carrying a yoyo. The undulating yoyo symbolizes the stock market. As the yoyo goes up everyone is elated. As it falls everyone feels discouraged. As the yoyo starts its next ascent, we celebrate with exuberance and then it falls once again, and our stomachs begin to feel queasy with apprehension. It is up to each of us to choose whether we focus on the rising and falling yoyo or the boy. You see, they both reach the top of the butte with its majestic views of Bend at the exact same time. If you don’t want to have a coronary, I strongly suggest focusing on the boy.

So, let’s take that analogy and apply it to another time in history. October 19, 1987 is an ominous date known as Black Monday. The Black Monday decline was the largest one-day percentage decline in stock market history. The Dow dropped by 508 points to 1,739. That’s right, the Dow was at 1,739 where today it’s more than 20,000. Investors thought the end was near and fear overtook the financial world as that 508-point loss equated to a market decline of 22.6 percent! Interestingly, following Black Monday the Dow corrected to not only be positive for the 1987 calendar year but would close on December 31, 1987 at an all-time, year-end record high of 1,939 points.

Just three-plus decades later, the Dow can easily fluctuate in a single trading day by more than Black Monday’s record-breaking 508 points. Case in point, the largest point drop in history occurred on March 16, 2020, when concerns over the Coronavirus pandemic engulfed the market, dropping the Dow by 2,997 points. The big difference is this drop was only 12.9 percent compared to 22.6 percent on Black Monday. However, the second largest point gain in history also occurred during this time of confusion on March 13, 2020 when the Dow gained 1,985 points. This was followed up by an even greater gain of 2,113 points or 11.37 percent just 11 days later on March 24, 2020, becoming the latest largest point gain in history. If someone had told you on Black Monday that in the year 2020 the Dow would be above 20,000 — where it currently is today, you would have thought they had lost their senses! The economy may continue its yo-yo-like movement with ups and downs, however, it’s up to us to remember to keep our perspective by learning from the past and rising to the challenge of the future.

David Rosell is president of Rosell Wealth Management in Bend. He is the creator of the podcast Recession Proof Your Retirement and author of Failure is Not an Option — Creating Certainty in the Uncertainty of Retirement and Keep Climbing — A Millennial’s Guide to Financial Planning. Find David’s books on Audible and iBooks as well as Amazon.com and Barnes & Noble. Locally, they can be found at Newport Market, Sintra Restaurant, Bluebird Coffee Shop, Dudley’s Bookshop, Roundabout Books and Sunriver Resort.

The information provided has been derived from sources believe to be reliable but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed. Past performance does not guarantee future results. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Indices are unmanaged and do not incur fees, one cannot directly invest in an index. Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.

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