Newsletter 05/29/2020
More activity and gradual reopening are happening. Take a look at the stock market over the past couple of weeks. If your barometer on the economy is the stock market, then the market’s near rebound indicates life will return to normal any day now. Cognitive dissonance rises to the top of my thinking. Stock market is good, however main street/unemployment is not good. The bond market indicates a view similar to main street’s concern about the economy. The bond market is cautious about any recovery and with the intervention of the Federal Reserve in March, interest rates have retreated to practically zero. Reversion to the mean happens sooner or later but with a “I need it now, not tomorrow” culture, our patience with the economy to heal is really hard in practice even absent public health as a concern.
We use benchmarks to measure progress. Both evidence of progress or lack of progress are critical measures in our society. As your advisors we use best practices to evaluate investment performance against investment benchmarks. Through the pandemic we have all become more attuned to benchmarks tracking our handling of the public health crisis as our responses have been reported by major news outlets. Benchmarks for both the economy and our response to the public health crisis seem pretty grim. It's important to remember the relativity bias. If benchmarks for public health include tracking new cases, new case rates, hospitalizations or deaths, and those benchmarks are set very high, then the contrast of a lower actualized figure is normalized, and we can forget how bad the absolute figure really is.
Despite these concerns, as financial planners, we always have our eyes on our client’s timelines. Life does not happen in an instant. Engaging in the financial planning process provides increased confidence in our ability to influence outcomes to the extent that we can make better, more informed decisions and feel prepared for contingencies as they arise. Planning provides the space for us to pivot when the need arises without feeling totally caught off guard. Planning provides a framework and a process to help make the best decisions for all that life has to offer, both expected and unexpected. Our goal is to increase our client’s confidence in their decisions. A decision-making process considering all the facts and looking at options, providing different perspectives and listing pros and cons of each option, helps increase the likelihood of making the best decisions. We also believe in stress testing all the options so you feel as prepared as you can be with Plan B, C, and D.
In persevering through this time, it is important to remind ourselves of what we have- our families, friends, Zoom/Google Meet, food on our table, a safe place to live as well as remembering those who are not so fortunate. Providing to others when we are able and being there for each other stretches far beyond financial means. While we may feel isolated from each other physically, being there for one other as a friend to talk to, providing encouragement when needed, lending an ear to listen, and offering companionship through life stages is even more powerful.
We’re here for you.
