Are we out of the woods yet? This is the question on the minds of many. Have we flattened the curve? Did we do enough to prevent an outbreak that could devastate our health care system? Are the medical treatments effective? Will there be a vaccine coming? These are great questions, but not ones I am qualified to answer. While I have numerous letters after my name, MD is not among them! I'll leave those to the qualified health care professionals.
Yet, "are we out of the woods yet?" has an economic side as well, which many of you are asking. You've seen the market drop dramatically from mid February to mid March and have seen a good portion of that drop recovered during late March and April. While markets are still negative year to date, things have substantially recovered.
So are we out of the woods? Hard to say...unemployment continues to climb. Many businesses are still either voluntarily or forced to be shut down. While some folks are defying orders and going about, others are fearful and won't return to travel, leisure, entertainment and shopping for some time. Some businesses are thriving while others contemplate how to bring their employees back safely. There is still no clear path to returning to "normal".
And none of this is predictive of short term market returns. Markets have risen on days where record breaking unemployment numbers have been released. And we have seen the market drop on days when there is good news. Guessing short term outcomes makes us all look foolish.
Stock markets are anticipatory - looking towards what future results are likely to be for companies. It is changes in these expectations that impact current prices. But the truth is, these are educated guesses at best. What is to come is ultimately unknowable.
So, as always, we believe that all knowable and predictable information is already priced into the markets and that timing the market is typically futile and costly. Predictions are hard - look at this article of predictions collected late last November by CNBC. How many look good now? And missing out on just a few of the best return days can erode the majority of the potential return.
This is why we have such conviction behind financial planning and not simply investment management. Financial plans are built to withstand shock. I will be speaking to this in more detail shortly.
Feeling nervous is normal. And I am here to talk, to plan and to protect that plan. You can schedule some time to talk with me by clicking here and selecting a time that works on my calendar. The questions and discussions are always welcome.