Calm During the Storm

For many Millennials, this is the first time you’ve had enough money invested in the stock market to really worry about what it’s doing. The last time we went through a bear market was about 12 years ago. I was in my early 20s and I didn’t have enough money in my 401k yet to really give it a second thought. At that time (in 2008), I was answering inbound phone calls for a major brokerage firm. Our hold times went from 30 seconds to 90 minutes and people were panicked and frustrated. Everyone wanted to know if we had hit bottom and how much further the market would drop. I was a newly minted Series 7 stockbroker, and I barely knew the difference between a bull and bear market, much less how to plan for a recession or what to expect. (For reference, a bear market means stock prices have fallen 20% from recent highs and a bull market is characterized by rising stock prices over an extended period of time.)  It was all I could do to follow my leadership team’s advice and tell the hundreds of clients I spoke with each day not to fear or sell stocks in a panic.

The call I took that stands out the most in my mind was an elderly woman in her 80s. She called in, crying, afraid she wouldn’t have enough money to live on. I had to take a mental break after that call. I still get a little emotional thinking about that poor woman who had no idea how she was going to continue to live after she had lost nearly 50% of the value of her investments. No one had told her why, at her age, she shouldn’t be invested in all stocks. No one had told her why, at her stage of life, she should have enough cash to cover at least a year’s worth of expenses. Essentially, no one ever advised her on proper investment planning. That sweet, elderly woman has no idea, but she is one of the reasons I was determined to do what I do. That is, help people put a plan into place and be prepared for events like what we’re experiencing now.

We’ve reached the time where the recent bull market has finally come to an end, and we’re at the beginning of our first bear market in more than a decade. Seeing headlines like, “Markets plunge” or “Dow at its lowest level in three years,” do not bring a sense of comfort and relaxation. Tack on the fact that many of us are working from home right now to comply with “social distancing,” so we’re surrounded by the news on our laptops, tablets, phones and TV screens. At this point in time, the best three pieces of advice I can give my #MillennialMonday readers are:

1)    Unless you have a reason to do so, don’t look at your investment statements (or the online balances) for the next few months.

2)    Stay the course with your investment plan. You have plenty of time to recover. If you’re investing regularly in retirement plans, keep in mind you’re buying stocks at a steep discount.

3)    This too shall pass. We’ve successfully made it through virus outbreaks, bear markets, and recessions before.

Having a comprehensive financial plan in place can bring a sense of confidence and comfort during times such as these. If you’ve been considering meeting with a Certified Financial Planner™ professional, like one of us, now is a great time to make an appointment.

-Margaret Gooley, CFP®, Worley Erhart-Graves Financial Advisors