By Valerie Fishgold MS, CFP®
Fishgold Financial Services, a Comprehensive, Full-Service Financial Services and Solutions Firm Headquartered in Scottsdale, AZ Martin R. Fishgold and Valerie Fishgold, Certified Financial Planners®
I witnessed some optimism coming from Wall Street on the morning of March 31, 2020, even though this was the last day of one of the worst months and worst quarters in financial history since 1987. We all know that the past several months have been terrible. Other than US treasury securities; stocks, various bonds and bond funds including municipal bonds all experienced declines. Even gold experienced declines when the markets were falling. Computerized trading exacerbated the steep declines as well as some of the rallies. If the market was a human, we would say it was exhibiting manic depressive behavior. The market is reflective of the emotions of the humans that created it. The recent market declines provide a real picture of the fear that we all have of the terrifying, invisible unknown. The stock market is always quick to sell off when there is uncertainty. The depth of the selloff is reflective of the amount of fear. Acts of terrorism, changes in tax law, international events, government mandates, raising of interest rates, war, pandemics and now the biggest of them all, the “Coronavirus” are each examples of historic declines.
So where is the optimism? And why? I listened to well known investors speak and commentators regurgitating their conversations with company heads, economists, stock analysts, and those who follow charts. It was almost a universal mantra that last week Monday may have marked the bottom of the market. The realization is that this disruption to our economy was a result of a virus and not because our economy was fundamentally in trouble. The success or failure of a company is reflective of the underlying trend prior to the virus. Those companies that were doing well prior to the virus will do well after the virus is under control. The future (or demise) of those companies who were having difficulties will also be reflective of the underlying trend for their business. The virus just accelerated the process of weeding out the losers. We have seen this pattern before. It happens during periods of significant market disruptions.
The question kept coming up about “what to buy, how much to buy and when?” Some top investors have already started a program of buying a bit at a time. Many suggested stocks to buy during pullbacks. None seemed to suggest that we will go up in a straight line from here, rather, many expect a traditional “retesting” of the market bottom over the next few weeks or months until there appears to be some reduction of the trajectory of the number of cases in the United States. The stock market will most likely continue to be volatile until the infection rate shows improvement. Until then, expect some nasty stock market days ahead giving those with guts the opportunity to add to positions by buying at decimated prices. Since the turning point is unknown, these investors may not deploy all of their capital at once, but they will build a position over time.
Just what is causing this glimmer of optimism? We know that the majority of those infected will recover from this disease. The economy will recover. We don’t know exactly when, but we know deep down that we will be able to assemble again and carry on with a normal life again. The definition of what is normal will change. Many people will continue with their old jobs, but they may be doing them differently. Some will be employed elsewhere. There will be many companies that will prosper again. There will be some business that will cease or be acquired. We have learned a lot during this disease. We have found that many employees can continue to work by shifting their workplace to home. Working from home is succeeding for many companies. It is an option that will increase the types of technology and equipment our companies and workforce will need to be more productive and efficient. I experienced a glimpse of how workable the use of these communication technologies can be. I attended a Torah/bible study of approximately 63 people online as opposed to in person. It was great! I was surprised at how many very senior adults were able to use Zoom to participate. The experience gave me great vision and excitement over the future.
This terrible virus is causing a more rapid evolutionary change in our shopping and business operations to the trend that was already in process. We all know that shopping online has been growing and hurting brick and mortar retailers. It is now happening a lot faster. How necessary is all the business travel? Can some of it be reduced in lieu of better means of electronic video conferencing? What opportunities will emerge from the growth of these business operational and communications technologies. We will probably see a lot more telemedicine. It makes a lot of sense in delivering care and reducing the spread of disease. These types of treatment options may also bring down cost. Prior to the Coronavirus, we were complacent and even reluctant to change some of the sources of supplies, materials, components, and manufacturing. Business has been forced to re-visit and diversify their supply chain. We now know it is critical to move pharmaceutical manufacturing back to the United States and friendlier countries. The same will be true of other critical industries.
I am not denying the current reality of financial loss, nor the pain, suffering, and loss of life. I am affected by those who are struggling or who have been devastated either financially or medically as a result of the disease. I am amazed at and thankful for the willingness of healthcare workers manning the front lines of battle, risking their own lives. I give credit and thanks to all of those who are publicly exposed like the grocery and drug store workers and all the others who are attempting to keep us with some level of supplies and services. I get a lump in my throat when I think of those who have lost their jobs or who will lose their jobs. Despite the terrible toll, I can only be optimistic about the future when I see what is being collectively done to fight this virus.
This terrible virus will end up re-invigorating all of us and making us stronger and better. We are learning about weaknesses in our supplies and systems. We are getting important experience in managing a widespread crisis. We will be better prepared for a future, possibly worse pandemic. We have many things to be proud of during this crisis. We have seen the devotion of scientists, healthcare workers, and leaders in finding means to defeat the virus. Large and small businesses have stepped forward and quickly re-tooled to manufacture what is needed to fight this Coronavirus enemy. Individuals and businesses have adapted to delivering goods and services under adverse circumstances. The Federal Reserve System acted swiftly lowering interest rates and providing needed financial support to keep our cash markets liquid. Even our public officials who loathe each other worked out measures to assist individuals and businesses during the crisis and with the most massive support bill in the history of this country. The result is that we will return to normalcy. The exceptional American people have come together to all help defeat this enemy and preserve lives, communities, and livelihoods.
P.S. …..and the end of the story is that toilet paper and paper towels will be in abundant supply in our stores once again.