Nick Foy, CFP®
The news over the past two weeks has moved at a brisk pace, to say the least. The state of the world from just one month ago is virtually unrecognizable at this point as we’ve made bold steps to control an invisible virus.
Our partners at Dimensional posted a video the other day to offer some perspective, and I think you’ll enjoy it. We also thought we’d share some additional perspective too.
The world now looks a lot scarier than it did in January or February, and that got me thinking.
I’ve often wondered how I would’ve reacted as an investor in 1929, when the stock market crashed and set off the Great Depression. In hindsight, it would’ve been great to say that I would’ve closely followed the rules of finance that have been developed through decades of research, but that would’ve been difficult for a couple of reasons:
First, there weren’t decades of research to guide the way.
Second, since there weren’t decades of research, there were really no rules.
But there have been some other really scary, confusing times in American history where I’m sure people have thought: How are we ever going to get through this?
In the 20th century alone, we dealt with two world wars, the Cuban missile crisis, the counterculture movements of the 1960s coinciding with the war in Vietnam, and the Cold War. The 21st century has already seen plenty of heartache, with 9/11 and the global war on terror stealing lives and headlines for almost the past 20 years.
But through all of that, we also cured polio, made a ton of progress on racial equality, gained ground in the fight against cancer, and significantly reduced poverty all around the world.
If you ever need a reason to be optimistic, just scour the data at humanprogress.org.
In the meantime, know that eventually, all bear markets have come to an end.
When that happens, it’ll be good to own more shares of the global capital markets. Investing in the red can be really scary, but if you’ve got cash on the sidelines, or it’s time to make IRA contributions, you’re better investing in the red than in the black.
For now, we’ll continue harvesting tax losses and rebalancing your portfolios to take on an appropriate amount of risk.
I think that someday, our grand kids will look back at the Great COVID-19 Panic of 2020 and say, “boy, that must’ve been really scary.”