Medical professionals knew that a viral, global pandemic was not a matter of if but when. Where was the plan? If closing schools and businesses was a known policy to fight infectious disease, why was there no communication to the public that this could happen? Now is not the time to point fingers, but to act with vigilance and compassion. When we get through this, and we will get through this, there are major lessons to be learned. Mistakes have been made, but we won’t know the consequences until after that fact.
With a plan in place, we would all feel less panicked than we are today. That panic is adding to the carnage in the financial markets. However, we must give the markets credit for pricing in the economic damage this pandemic might cause. Over the past three weeks, the reality Americans are finally coming to grips with today, was priced in. You can believe the markets will price in the recovery before anyone knows it’s coming as well. It’s pretty amazing to witness in real time.
I have never understood the value of a financial plan more than I do today. Taking clients through a rigorous planning process is not a value added service for advisors, it is table stakes, essential. These plans include bear markets, and in bear markets, stocks can drop 40-50% from their highs. We knew this could happen again and built that assumption in to our financial plans.
More importantly, we were brutally honest with clients that this would happen, possibly several times, in their investing lifetimes. We estimated the dollar decline in their portfolio that would result from this type of market drop. We asked them if they were able to stomach this type of volatility. We helped them visualize how they would feel and what they would be tempted to do in reaction. Then, we told them we would be there to help them stay invested and ride it out.
That is exactly what I am doing today, staying in communication with clients and helping them ride this out. Our conversations are about much more than the market though. We talk about their plans to stay at home these next few weeks and how their family members are handling the current situation. The groundwork for this was laid in the planning process. It was invaluable.
We will get through this. Our lives will be changed forever from this experience. I cannot wait to read about the bravery and ingenuity of my fellow Americans to solve this crisis. We all have a role to play in slowing the spread of the COVID-19 coronavirus. Mine is to stay at home as much as possible, stay in contact with my clients and readers, and to enjoy the madness of having a three-year-old and a newborn at home while trying to work from home.
Dare I hope that this might be the moment that heals the extreme political division that has grown in recent years? We are all in this together. The whole world is fighting this epidemic. We’ve got this.