Should I Stay or Should I Go? The Clash & COVID-19

Tuesday, March 17, 2020

If you are the same age as me, you remember this song released by The Clash in 1982.  It was an instant classic soon after its release.  The lyrics dealt with a troubled relationship, but when I heard the tune the other day, it certainly made me think of the many conversations I have had with clients over the last few weeks.  Only four weeks ago, the three leading stock market indexes were trading at all-time highs, and families were thinking of their spring break trips.  On Monday, March 16th, the S & P 500 declined 12% [1] By the end of that day, the three leading stock market indexes were down almost 30% from those all-time highs [2].

The COVID-19 pandemic is causing disruptions and distractions for you and your families, one of which is the market’s impact on your wealth.  Stock market ups and downs can be unsettling, especially when fear, uncertainty, and headlines are driving market movements, rather than actual economic data or company performance.  In the next few weeks, we will have the earnings reports of companies begin to be released, and no one should be surprised that a majority of if not all those companies will miss their projected earnings.  I expect that many companies will miss their earnings projections in the 2nd quarter also.

The great unknown is if the drop in stock prices has already priced those earnings misses in or if the market has further to drop and we work through the pandemic.  I have told clients many times over the years that I don’t have a crystal ball and that I have not met anyone who can predict the ups and downs of the markets.  My conversations have been different with each client over the last few weeks, and it has depended on the stage of life of a client.

If you had retired at the end of the year and received a lump sum pension, your advisor may have told you the markets were trading too high and that you should wait for a pullback.  If that was the case, did you put some of that money to work in the last few days?  I hope so.  If you are still planning on working another ten years, did you change the allocation in your retirement plan or even stop making contributions to your plan?  I hope not.  If you are retired and depend on withdrawals from your investments to meet your budget, hopefully, you were not fully invested in stocks at this stage of your life.  The conversations I have been having genuinely have been different for each client.

I am optimistic that this pandemic will pass, and while past performance does not mean the same will happen in the future, history shows us that staying invested can have benefits as a recovery has followed every downturn.  Successful investing occurs over the years, not weeks.  I would encourage you to think where we may be at three months from now and not where we may be at three weeks from now.

Wesley Lentz

[1] Yahoo Finance, S & P 500 Charts

[2] Yahoo Finance, S & P 500 Charts

S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

Author

Wesley Lentz Wesley Lentz

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