Author: Marty Moore, CFP®
Take yourself back…
Imagine it’s January 1, the start of a new year – and a new decade.
After a nice New Year’s Eve celebration the night before, you’re now relaxing with your morning coffee thinking about the day ahead. Maybe you’ll catch some of the college football bowl games later, or maybe you’ll start getting your 2019 tax return information together to get a jump on preparing last year’s tax return. Or maybe you’re looking forward to a visit later in the afternoon from friends or family. Occasionally you glance over at the television to see one of the amazing floats gliding down Colorado Boulevard during the Tournament of Roses Parade.
Times are good.
Then, like out of a movie, a booming, ominous voice from above appears out of nowhere and says: “Listen up! I have some things to tell you.”
“First, in a couple of months the U.S. and the world will be hit by a pandemic, the worst in 100 years. By the middle of the year over 100,000 people in the U.S. will die and almost half a million worldwide. And it won’t be over even then.” (Johns Hopkins University)
“The government will all but completely shut down the U.S. economy to fight the spread of the disease. Over 22 million people will lose their job, wiping out 10 years of job gains.”
“The steadily declining jobless rate over the past several years will spike to a level not seen since the Great Depression.”
“The stock market will drop over 30% in record time.”
(S&P 500, January 1, 2019 – June 12, 2020)
“Then in May the U.S. will face a nationwide protest so important that it will all but totally crowd out Covid-19 news.”
You plead for the “voice” to stop. It’s just all too much.
Occasionally the world breaks…
It seems to happen once or twice a decade. It happens for a myriad of reasons – economic, political, social, or a mix – and it happens in ways few of us see coming.
So how do we even begin to make sense of the future when things change so fast and routinely the world seems broken?
What works for me…
I have certain beliefs – permanent assumptions, if you will – that help me remain confident and optimistic about the future during times of distress. They also help me stay grounded when things are on an upswing and the pace of progress seems unstoppable.
- I believe that nothing too good or too bad stays that way forever. Eventually, (and unfortunately), good times plant the seeds of their own destruction, be it over-indulgence, complacency, laziness, or a host of other reasons. Bad times too plant the seeds of their own recovery through new opportunity, innovation and, often-times, panic-driven problem solving (e.g., the rush and resources being devoted to developing a Covid vaccine).
- More people wake up every day trying to solve problems and wanting to make the world a better place than those wanting to cause harm. All people are not all good. But there is a lot of good in our world. Evil and destruction is too sensational and heart-wrenching to ignore. It is forever front and center – thrust in front of us 24/7. It’s almost impossible to escape. Goodness, kindness and lending a helping hand never receives the attention it deserves. But it’s a quiet, inexorable force that moves us, and the world, forward.
- Progress happens too slowly for people to notice but setbacks happen too quickly to ignore. I believe this is so for ways that are not only economic in nature, but also political and social. Economic progress can be measured and the gains we have made in the U.S and around the world, especially in the last 100 years, have been exponential. Declining rates of poverty, elimination of deadly disease, increasing standards of living – in almost every way we and the vast majority of people around the world are better off today than we have ever been.
In political and social realms, it often seems we’re moving backward. I believe otherwise. The problems that exist today are problems that have always existed – we just didn’t really know how big the problems were or we chose to accept them as they were. Today, we know more about the problems that need to be addressed and solved. Today, we do not accept the problems that need to be solved. Knowing more and deciding to no longer accept past abuses is painful, to be sure. There are no quick fixes and we’ll have more pain as time goes on. But the hurt and anger and destruction, however necessary it might be, will lay the foundation for progress to be made.
A perplexing question…
With the dire economic conditions we are in, and will continue to face over the coming weeks and months, how has the market rebounded so strongly?
From a recent Bloomberg Opinion article: The stock market is not a barometer of our country’s health – politically, socially, or even economically. Its sole function, as wonky as it may sound, is to quickly, accurately and unemotionally tabulate investors’ consensus view about the health and prospects of publicly traded companies. In that regard, the market has ably done its job throughout this crisis (Covid-19), regardless of the opinions about the outcome.
The article continues: Right or wrong, it’s useful to bear in mind that the stock market’s job is to impart the consensus view around companies, not opine on or account for the broader political, social or even current economic environment.
The recent forceful move back up in the market is essentially the millions of individual investors (and the institutions that invest on behalf of individual market participants) sending a message: The global economy will recover and the fortunes of the companies that they invest in won’t be far behind.
It certainly doesn’t mean that near-term risks have evaporated. The recent rebound is built on expectations of an improving economy. As I have mentioned in previous Newsworthys, and in our conversations, the key is expectations being met. If the restart of the economy continues on an upward trajection, the recent rebound may hold. If we have a severe second wave of Covid-19, or if the improving economy falters, we may see an unfavorable reaction by the market.
On a lighter note…
All of this can be quite emotional.
As a nation, we’re often divided. We don’t always see eye-to-eye. Here’s something, however, that we all can agree on…
As always, thanks for reading.
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