A Nation Shuts Down

Greetings.  Bud here again with another report from rainy Scottsdale, Arizona.

These are not normal times, and not normal of me to send notes to you as often as I have. I wanted to share more items again to give my perspective of what’s happening.  Since Monday, in my view, it appears the markets are digesting the demand shock this is event is causing.  This evening the President announced a 30 day travel ban starting Friday from Europe. The NBA just suspended its season. Events are shutting down. Schools are shutting down. People and businesses may not be buying as much in the short term.  Demand from consumers to buy stuff at the pace they were a few weeks ago is down and may stay down, except for Purell and toilet paper. Layoffs and job cuts are starting to happen.  On the other side economically, China nearly shut down supplying the world and projections are that normalcy will occur later this month

Markets are constantly seeking out equilibrium, determining a price level that takes in as much as we can understand what will happen in the future.  The global economy will survive.  The stock, bond and other financial markets will survive.  These massive swings in markets will settle down once uncertainty goes down, as it has in the past (no, the market will not go to zero for those of you who ask this question 😊).  Stock and bond markets are at levels that take into account expected future events.  Some might add (yours truly) there may be times where fear or greed cause these levels to be higher or lower than they should be.  Right now, there is very good money to be made in some areas with good timing, a little luck, and a sharp pencil. Good stocks are being tossed out with the bad.  Prices overall are cheaper than they were because of these events however there are opportunities.  If the stock market were a discount shopping store, we’d be looking for signs that read “bargain basement prices” for the items that were indiscriminately sold off over the last few weeks.  For you, this is not a time to be selling out of stocks if you’ve already chosen to have the right exposure to them. 

Heintz Wealth Management operates as a two-person operation, however we have built a very reputable team of experts to provide insight and support in times like this.  A unique advantage we have is to gain insight from multiple resources to provide you both sound financial planning and investment management. Morgan Stanley’s emerging market investment management team put out an interesting piece on the the outbreak – check out the chart on the second page. The Capital Group, a firm that manages funds under the American Funds name, put together this assessment on the situation.  In addition to all the other sources of information you receive this may be as helpful if not more helpful in understanding the ever changing landscape right now.  For us, it helps to see how different sets of eyes are reacting and responding to this event.  Ultimately for you, we want to provide a service that puts together the wisdom and knowledge of experts from many different sources, not just one firm’s advice.  It takes many people to connect your money to your lifestyle.

A final suggestion – take 10 minutes to view this “Guided Meditation for When the Stock Market is Dropping” (for those wondering what Heintz Wealth uses in place of the symbols mentioned in the video, instead of VTSAX we currently use an ETF with the symbol USMV and for VBTLX we use a combination of bond strategies.  This is in addition to other investments that seek better performance on a risk-adjusted basis).  Some might find this relaxing, some might find it slightly humorous.  Stay healthy, sleep well, and keep prospering.