The news of the last week is simply unprecedented; virtually all economic activity has come to a halt. This remarkably rapid drawdown in the stock market is the result of a massive overall economic slowdown whereby businesses large and small will undergo dramatic changes. And, no, you could not have predicted this six weeks ago.
As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth,” and our economy just got socked. Many, many businesses are likely to go under if the government doesn’t quickly provide a backstop. A very large number of people are going to lose their jobs, and many more people’s lives are being severely disrupted.
The point is that, even if you currently hold a stockpile of cash, it may not be sensible to invest in the stock market. Yes, expected gains from current levels are much more attractive than they’ve been in some time, but that’s meaningless if you’re going through a personal financial crisis. For many, it is time to hunker down and prepare for the loss of a job, massively decreased value of one’s company stock options, or tenants who won’t be able to make their rent. In other words, this will prove to be a time when personal financial planning trumps investment management.
Hug your loved ones extra-tight, stay healthy, and call if you need some guidance.
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