I don't know

It’s wholly unsatisfactory I know.  At a time like this, what you want more than anything is someone to tell you what is going to happen next.  I wish I had that information.  I really really do.  All I can say is I don’t know.  I don’t know how this virus is going to play out.  I don’t know what the economic fallout will be.  I don’t know where the bottom is in the stock markets and I don’t know how much more pain we will take.*

But there are a few things I do know (phew I hear you say).  I do know that this is temporary, like every other crisis that has ever been before it.  I do know that this too shall pass.  I do know that markets, without warning or any ringing of any bell, will resume their uptrend, possibly never to return to these levels again.  I also know that, based on history, we are entering the zone of opportunity.

It’s easy to be an intelligent, rational investor when the markets are going up.  When things turn, especially when they turn as quickly as they just have, our intellect is no longer in the driving seat.  Our emotions take over. 

We must listen to our emotions.  We must allow ourselves to feel anxious, to feel scared, or guilty or resentful – whatever the emotions are.  It’s ok to feel it.  I am here to listen to you.

The absolute key thing is that we must not act on those emotions.

We accept the uncertainty, the unknowability.  We accept it as part of the process.  When we put our money into the stock markets in order to give ourselves the best chance of achieving our long-term goals, we do it knowing we cannot ever know what happens next.  This is what it means to be an investor.

Whilst every single stock market crash is different in its nature and its cause what is always the same is the recovery.  The market goes down but it never stays down.  It has never stayed down.

Despite the headlines, I am not willing to bet that this is the time the world actually ends.  That bet has never paid off. 

As a Liberty Wealth client you have an intentional portfolio – what I mean by that is that it is a beautifully designed collection of diversified investments that gives you the greatest chance, based on history, of achieving your life goals.  It’s not a “have a hunch, buy a bunch” portfolio (as named by my friend Carl Richards).  It’s a real portfolio, built on purpose.  Not only that, but we built a margin of safety into your financial plan.  None of the money you have invested in the markets today is needed for any short-term goals. 

So, we’ve taken the weighty evidence of history and combined it with your life-time goals.  The last thing we want to do is react to current events, however scary they seem. 

If you have a plan you act on your plan.  If you don’t have a plan you react to current events.  Only one of those paths leads to long-term financial success. 

If you are reading this and you realise that your portfolio doesn’t reflect your long-term values and goals, and the weighty evidence of history, then now might be the time to come in and talk.  If you have colleagues, friends or family members who are distressed about the recent market declines, I would be more than happy to meet with them and offer them some reassurance. 

As Morgan Housel wisely wrote:

“It looks bad today.

It might look bad tomorrow.

But hang in there.

We’ll get through this.”

*FYI – no one else does either.

Georgie

georgie@libertywealth.ky