We’re going to get through this crisis and 12 months from now we’ll be stronger
March 23, 2020
Hi, I'm Sean
20 years of finance experience and obsessed with high quality results.
No doubt this is a scary time. This isn’t just a financial crisis, like 2008-09, this is a global health crisis crippling our economy. We are reminded daily of:
This is all real and should not be minimized.
However, we also need to recognize that we are making great progress and this will all end at some point. Our financial and economic engine is intact and when we neutralize the corona virus our economy - and stock market - should snapback relatively quickly. There will be some financial restructurings for sure, but restaurants and stores will reopen, people will go shopping, start travelling and return to work.
Today New York announced the closing of all non-essential business and yesterday California announced state-wide stay-at-home provisions (many states will follow this weekend). These are necessary and very effective ways to mitigate the spread of the corona virus. This is good news that demonstrates we are taking this threat seriously and addressing it head-on. I hope that we’ll look back and say we over-corrected; certainly better than not doing enough.
If you’re interested in some good news:
During the 2008-09 financial crisis US Stocks fell 56%. As of today March 20, US Stocks are down 33%. There were reports today in the news that some big spending billionaires like Buffet and Icahn jumped into the markets.
Be Greedy When Others are Fearful, and Fearful when others are greedy - Warren Buffet
I love that quote. Way easier to say than do. History shows, systemic shocks to our economy are always followed by significant economic and market growth.
It’s very possible this is NOT the bottom and the market will go down more. A lot of people will be quarantined at home worrying over the next 3-4 weeks. However, it is likely the market will be higher 12 months from now than it is today.
Overall, the US Stock Market is down 34% (green line) over the last month. Our Big 3 trillion dollar tech companies: Apple, Amazon and Microsoft have held up remarkably well down between 15% and 30%. Netflix has really proved resilient only being down about 14% (makes sense right?).
One way of thinking about all of this is these stocks, or the whole market is “on-sale”. Now they could get even cheaper, but the real question to answer is will they go up eventually? There are a lot of companies that are really cheap, like Zillow, down almost 60%.
Also, this is a great time to fund long-term investments, like 529s and IRA. Maybe 401ks, but don’t fund too early and sacrifice employer match.
Can’t wait to see what next week brings.
Stay healthy and positive!