Last fall I attended a symposium for financial advisors hosted by one of the money managers that I use. It was a great event and I left with so many ideas about how I can be better at what I do. After that event, I vowed to make every effort to attend at least one conference a year from now on. Little did realize that conferences like that were going to be a rarity in 2020.
Last week, I wrote about the lessons I learned coming out of the Tech Bubble Burst / September 11th recession. This week, I’ll follow up with lessons from the Financial Crisis.
We are all aware of how unprecedented these times are. But as Mark Twain once famously said, “History may not repeat itself, but it sure does rhyme.”
The most obvious impact has been the stock market. As of Wednesdays close, the Dow Jones Industrial average has hit bear market territory down 20%. The S&P 500 will probably close there on Thursday. As I’ve always said, stocks follow profits over the long term. The markets don’t like unknowns and discount stock values when unknowns are present. We don’t know what the impact to profits will be, so we don’’t know how to price the markets - so it gets discounted. There is no way to know how long this impact will last.
Finally, what should we do during times like this in the markets? Stay calm! One of the worse things that one can do is to over react and sell everything. Markets could go down more. Or, they could recover tomorrow.
