PFA Updates

May 01, 2020

While we've generally been sending out financial/market updates since Covid-19 hit the US, we wanted to start sharing some personal updates again, so I'd like to share a bit about what my wife and I have been doing while in quarantine before I talk about what we've been hearing from clients recently. 

My wife and I normally have a pretty robust (she might say excessive) social calendar because I am always itching to do something and not just be sitting at home. Our joke is that we're gone so often, we forget what the inside of our house looks like; so this quarantine has dramatically changed our lifestyle. All of a sudden, there are no events with family or friends to attend, no sports to play, and no travel plans to make. Once the stay at home order was put into place, we decided to take on some home projects (because really what else is there to do?). I think I've been to Lowe's every weekend since quarantine began, and as a result, we now have new paint on some walls and a fireplace that was long overdue, in addition to other general work around the house. 

Normally at this time of year, we're gearing up for the beginning of the soccer and softball seasons that we play together, but obviously this year there's nothing like that on the horizon. Instead it has been replaced with training for our legs of the Akron Marathon relay (because I promised Tom I wouldn't embarrass him with my performance and that's going to take quite a bit of effort). Other than that, we've been investigating Netflix thoroughly (I think we've watched every Romantic Comedy that they have on there), hanging out with friends periodically through Zoom meetings, and just enjoying spending time with one another. We wish each of you well in the midst of your own quarantine and hope that everyone is staying healthy.

As I transition to what we've been hearing from clients recently, I think we can feel that things are settling down a little bit. There's still nervousness, but we feel the initial shock of the virus and corresponding stock market decline have reduced; on the stock market side of things, it helps that as I type this we're up about 20% from the recent trough we saw in the market back on March 23rd. We've had several clients ask about a realistic timeline for a full stock market recovery, back to its all-time highs and our answer at this point is that the economists we follow are generally saying it will take about 12-24 months for us to make a full recovery from the recent drop. As Dr. David Kelly from JPMorgan said on a call recently, he expects 2020 will go down as the year of the virus, but 2021 will go down as the year of the recovery. Consumer spending makes up about 70% of the economy and we need people to feel safe before they're going to go out to restaurants, make travel plans and attend movies/concerts/events again. The reality is that's not going to happen overnight, but as the government restrictions start to lift, hopefully we can start working in that direction. The other question we've been getting regularly is what action should clients be taking in the midst of this downturn. Tom sent out an email a couple weeks ago that led to quite a few positive conversations about how to make lemonade out of the lemons this market has given us, but the underlying message continues to be not to sell stock right now. For accounts that we manage, we have bond funds that are positive year to date that we can use if clients have a need for money in the short term, but longer term we are believers in the stock market because we know history has shown us that the stock market has recovered from drops like these 100% of time and moved forward to new highs in the market. It is impossible to time the market, but the true key to successful investing is time in the market.

As always we're happy to answer any questions that you may have. 

I hope you're doing well! Stay healthy!

Dan