Back to School
It’s hard to believe that we are now six months into the pandemic. It seems that everything has changed while paradoxically, nothing has. Typically, by this time of the year, my kids and I would just be hitting our stride with their school schedules. I would have settled into being Uber Dad and getting my kids to and from all their academic, sports, and social activities. I would be meeting clients in person, meeting up with friends and colleagues at happy hour or training and racing for a mountain bike event in the area.
But here we are, in late August, still mostly sheltering in place – moving on without really moving on. My son entered his freshman year in high school and my daughter started 6th grade. Online. From home. Along with the changing of schools, new classmates and friends, the landscape ahead is uncertain. Even if we do go back to school in person, we’re not certain how long that will last. We’re all ready for this to be over and to get back to normal, but we’re pretty sure we’re not going to see things like they were in January for a while.
When it comes to your investments, there are a lot of similarities to this. From its peak on February 19th, it took the stock market 23 days to lose about a third of its value. It then spent 97 trading days to recover that loss, gaining nearly 50% to create the shortest bear market on record. If you chose to get out of the market during the downturn back in March, when do you get back in? And how long will that last if things go south again with the market?
I’m repeatedly asked, “Are we in the all clear now?” After being in this business for over 20 years, I can say there’s never a time when it’s “all clear.” However, the emotions surrounding investing now are much different than they were in late March. Back then, there was a tremendous amount of fear and uncertainty about COVID-19. For many, the 30% drop in the market was too much to handle amidst all of the other uncertainties out there. Many of us still have that uncertainty, but the market has rallied all the way back from its lows on March 23rd and then some.
Two realities about this market:
- Nearly 80% of bonds are currently yielding less than 1 percent, with 97% below 5%
- 6 highflying stocks, representing over 25% of the entire market (Apple, Amazon, Microsoft, Alphabet, Netflix, and Facebook) are up over 45%, while the rest are down year to date.
And a couple interesting articles about trending topics in investing
- We are in an election year – here’s how markets have performed in the past.
- The top five stocks make up 25% of the S&P 500 index or over $7 trillion in collective market value
So, you might be asking, “Bud, are we in the all clear now or not?” I have learned to never declare “victory”. With investing, we never arrive; we’re always becoming. That being said, now is the time to consider reviewing your goals, investments, and the unexpected changes we have had to make over these past six months. Does it make sense for you personally to get back into the market? To consider other strategies we may have not considered before? Is it time to create or update your estate plan? While there will never be an “all clear” sign, now is the time to have these conversations and plans. I look forward to working with each of you to provide some sense of security in these uncertain times.