As we head into the second half of the year, let’s take a pause and reflect on what the heck just happened and look at what we can expect next. The first six months of 2020 produced a series of extreme events across the board on health, economic, political, and social fronts.
This year is on track to be one of the most volatile on record.
The S&P 500 is down about 6% for the year while our Gg portfolio buckets one and two are essentially flat. Yes, you read that right. If you stood firm and avoided the temptation to panic during one of the most volatile periods on record, you experienced little to no change in your portfolio from January 1st through today.
Staying invested, you endured the rapid decline, but fully participated in the rebound as well. In addition, staying invested allowed for the reinvestment of interest and dividends providing compound growth in the future.
Feeling a wild range of emotions during this time normal but acting on them can be financially catastrophic.
The decisions we make during this time will shape our financial future for decades to come. It’s almost impossible to see, but we are making progress and we will persevere.
However, it’s not just the survival of this crisis that will make us stronger, it’s what we learn about ourselves in the process.
The extent of our growth depends entirely on our attitude and the narrative we construct around it. It can make us sick with anxiety or it can identify things we’ve taken for granted in our lives.
If can bring us down or can clarify what matters. It’s all up to us.
To borrow a line from the great Yogi Berra, “It’s Deja Vu all over again”, as we face yet another round of COVID-19 case increases across the US.
We never ever make near term market predictions and will never endorse or support market timing in any form. These predictions and gut feelings simply don’t work and are not effective over the long-term.
We build long-term portfolios based on your life, not the market.
These short term, temporary market moves, while difficult to endure, are completely irrelevant to your long-life goals, full stop.
If you need money in the next twelve months, it should either be in cash or in one of our conservative Bucket 1 holdings. Outside of that, we have investment strategies designed to last and persevere through anything the world can throw at us.
There is a real sense of freedom once you accept that it’s impossible to predict short-term market moves and embrace that trying to do so is a waste of time and energy.
Investment management is one of life’s true paradoxes in that studies clearly show the more time we spend monitoring, reacting, or tweaking, the worse we do and the more of our precious life we waste.
While we have made extraordinary progress these first six months in avoiding the big mistake, our work is never done.
Uncertainty in the future is our only certainty.
We have a lot of fear and uncertainty now, but have faith, this too shall pass. Below are some of our key takeaways from the first half of 2020. We welcome your thoughts and feedback as to your experiences and what you have learned.
Simple is better.
Small is beautiful. Less is more. You get the point. For many, an immediate and real understanding of what truly matters was brought to the surface during the shutdown. Avoid complexity and focus on what is most important. Hint- it’s not the news.
Market timing is impossible.
In good times and bad, there is no way to predict how the market will react. As always, stock picking, market timing and politically based decisions never result in success. No one predicted the top or called the bottom. Timing the market is not investing.
Inaction is the best action.
This is not being idle, it’s being disciplined. And is the most important action you can take with your money. Our Gg portfolios performed exactly as they were designed.
Life choices matter.
In addition to investor behavior which we discussed above, what you did with your time during this experience could have made all the difference. Focusing on what you can control and things that bring about positive, healthy experiences in your life are paramount to living a fulfilled life without worry, especially during this time.
Mindfulness and self-awareness are crucial.
Communication is key.
Speaking often to those around you, both personally and professionally will help to feel more connected.
Emergency funds and access to capital are critical.
The last thing to do during a market downturn is sell long term investments. Having access to cash, emergency reserves and line of credit reduces stress and provides liquidity during uncertain times.
Leverage is dangerous.
Everything has a cost, especially leverage. Debt vehicles and payment strategies matter, especially during volatile times.
The media is not your friend.
The goal, in many cases, is not to inform, but to entice you consume more. Studies clearly show an inherent focus on the negative, while attracting eyeballs and viewership, leads to increased anxiety, fear, and stress.
Make a conscious effort to consume long-form, well researched news and books vs. short-form, opinion pieces, clickbait and cable “news.”
Professional advice is paramount.
2020 has again proved that financial advisors, doctors, lawyers, CPAs, insurance agents and other professionals are critical to help us navigate difficult times.
Utilize your professionals during these times, that’s what we are here for.
This time is not different.
While these are difficult times, our country (and the world) has faced far worse and persevered. This time will be no different.
Maintaining faith in the future is critical during these volatile times.
At the Gleason Group, we are operating at full capacity in the office hosting both in-office meetings, zoom conferences and phone calls. We’ve been reaching out to book annual reviews and are always available for check-ins or quick updates to discuss a specific concern.
Our team is consistently improving.
We’re excited to announce that we are in the process of a major upgrade to our audio/video technology and equipment. This includes top of the line technology in our office for group meetings and video conferencing. We’ll keep you posted as the rollout progresses. Please reach out to us anytime.