For the third time in a month the U.S. Stock Market halted trading for 15 minutes after experiencing a significant drop after the opening bell leading to the largest drop in history. However, this is unique to other recent financial crises. We are experiencing an external shock that is impacting many businesses ability to operate efficiently. This was not caused by banks making bad bets, or other economic factors. No one knows if we are at the bottom, if this yo-yo will continue or for how long. However, we are confident we will get past this as we have other extreme events in the past.
MFFM’s investment philosophy has always been to use a disciplined, strategic, long-term strategy by investing in quality and rebalancing periodically. We take into consideration each of our clients’ individual risk tolerances, cash needs and time horizons. Taking this into account we develop an asset allocation appropriate to those goals and needs keeping in mind your personal risk tolerance and have quarterly re-assessed to make sure your portfolio is still in line with your goals and needs. We always want to make sure that we know what any cash needs are over the next 12 months so that we have the time to raise funds at a market high and never be forced to sell at the bottom. For example, we raised all RMD’s (Required Minimum Distributions) in January not knowing what February or the rest of the year was going to bring. We believe all of our accounts have sufficient cash and fixed income cushion to weather this downturn.
This isn’t the first time our firm has experienced a severe down market, or a global financial crisis and it won’t be the last. Some things we recommend you do today:
- Call five friends (or more) and find out how they are doing. Usually in times of a perceived crisis we feel better when we come together with our friends, family and religious communities, even if only by phone. You have an iPhone, use FaceTime, and find out how friends are doing.
- If you have an elderly neighbor call them and see if they need groceries or anything from the pharmacy. An act of kindness is always a great way to get through times like these for them and you.
- Call a local store and buy a gift card. So many local small businesses may be in a cash crunch and their businesses are suffering from lack of sales. If you know you will go to that store in the future, and you have the cash flow now, buying a gift card now will help them keep their employees.
- Turn off the news. There is no sense in worrying about things you can’t control. Just because we must self-isolate, it doesn’t mean you have to watch the news. Go outside, stretch your legs and take a walk. The sky is still there, and the sun is still there. An attitude of gratitude is always good for your health and mental well-being.