Having just passed the midpoint for the year 2020, I have been reflecting about these unusual times of the Coronavirus. My mind keeps returning to the often used quote “The truth is stranger than fiction”.
This old saying, which some think was first written 200 years ago by Lord Byron in his satiric poem “Don Juan”, aptly describes events during the first half of 2020. Lord Byron was one of the great poets of his time, and his influence on literature was seminal. But he and other great writers may not have had the imagination to tell the tale of the bizarre year we have experienced so far!
The start of a global pandemic and health crisis; “shelter in place” orders; and then a sudden and record breaking economic decline were just the beginning. These unusual events were then followed by intense protests over the George Floyd killing and other issues about US race relations, disagreements over how and when we should re-open the economy, and debates about whether we should always wear masks outside of our homes, and more.
And there you have it – it has been quite a story, except this time in the non-fiction category! Undoubtedly, each of us has taken away lessons from this strange journey. The situation is not yet over and its influence may likely remain even for some period of time after we eventually solve Covid-19 (though we do not know when!). But there may be learnings for each of us. My main takeaways are the importance of personal resilience and the value of how our relationships with family, friends, and colleagues can help during difficult times.
Our connections with others are so vital, as we look for examples of how to cope with the stress about our physical, financial and emotional health. We as human beings are social creatures (even those who are not extroverted). For the time being, we cannot congregate as we have in the past, making the effort to maintain those social connections more challenging, especially during this particular episode. Our relationships allow us to talk through the experience, develop and/or enhance our coping skills, and potentially create new ways or ideas to make the situation manageable.
Fortunately, modern communication technologies like Zoom and Webex allow us to talk and even see each other in ways we could not have done in the past. These new tools, though imperfect, have offered profound emotional benefits for many people. They allow us to listen and learn from others who are important in our lives. We can take their positive cues and learn from their stories. Of course, how we adapt to this situation cannot change our feelings about the tragic health, human, and economic impact of this crisis. But while remaining aware of our emotions, we can simultaneously focus on the constructive steps we can take to cope and move to the other side of Covid-19.
My family, friends, clients and colleagues have all inspired me through the many ways they have adapted to the difficult financial and emotional circumstances. Like most of us, they certainly feel great sadness and/or frustration about the many personal and societal impacts of the Coronavirus crisis. Some are struggling more than others. However, I truly feel admiration toward the overwhelming majority of people I have come in contact with over these past months. In different ways, their actions, even in small ways, show a determination to move forward and a resilience to prepare for the better days ahead, even while not knowing when those days will return.
There is no one “right” or “wrong” way to move through these times but the quiet spirit and determination I have seen in others offer me a silver lining to the many tragic impacts of this virus. As a financial advisor, I am also very impressed with the calmness that many investors exhibited during the stock market’s historic decline during the initial weeks of the economic shutdown. Not only did I NOT see examples of panic selling (or even the temptation to sell), but many seemed comfortable with the uncertainty of how much time might be required before their portfolios recovered.
To the surprise of just about everyone, the stock market’s recovery from the March low point occurred almost as quickly as the decline. Equity markets have not yet returned to the year’s high point, but the months since March have seen a recovery that made up for a significant percentage of the fall in stock prices. Investors in many parts of the “high quality” fixed income markets (US Treasury Bond are one such example) actually saw their bond investments deliver very strong returns during much of the year, providing helpful diversification benefits that such instruments often provide during periods of stock market stress.
I think there might be several reasons that could explain the composure I have seen from many clients. There were certainly lessons from the 2008-2009 economic downturn, which taught investors that equity markets have the potential to eventually experience strong recoveries (though sometimes over a period of years). In addition, those individuals who receive comprehensive financial planning services may likely feel more confident that they can “wait out” the inevitable fluctuations of the financial markets – even very sudden and deep declines.
The resolution of this health crisis remains uncertain and the challenges can feel unsolvable at times. But for society and each of us individually, resilience, determination and maintaining positive relationships with important people in our lives may be the key to staying on track, both in our finances and other important parts of our lives. The path forward most likely will not always go smoothly but our mindset and outlook may likely help us get ready for better days ahead. We do not necessarily have to know the direction of the virus or of the stock market to move forward.
In spite of these very difficult times, I am hoping that all of you are not only safe and healthy but are also remaining resilient. These events have been troubling to say the least, and the stress and uncertainty can make it difficult to maintain perspective and stay balanced in all aspects of our lives. Please email or contact me at (925) 464-7057 if you need to talk or have questions.
All investing involves risk, including possible loss of principal.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
