Will This Global Stock Market Decline Ever End?

Bruce Primeau, CPA, CFP®, PFS |

In times like these, it may be difficult not to get upset when you see the global equity markets declining so rapidly.  If you are like me, if feels like we are on a raging roller coaster ride that can’t end soon enough.  In this time of great uncertainty, where many businesses are shut down, our federal and state governments are attempting to respond to the impact of the COVID-19 Coronavirus as quickly as possible. Their main objective is to devise a plan that will help both individuals and businesses bridge from now to a time when it’s safe to go outside again. It almost sounds like a horror movie, right?!

The press is out front, making sure everyone is aware of every single detail. They seem to be communicating that this time with this market decline, things are different.  I believe that the feeling that things are different this time is both correct and incorrect. Allow me to explain:

It is correct that we have never seen (at least in over a hundred years—the 1918 flu pandemic killed over 500,000 Americans) a virus pandemic like this, and the human and financial tolls worldwide may be extremely high.  That said, the global equity market’s reaction to this situation is not necessarily much different than any other recent time of uncertainty (1987, 2000, 9/11/2001, 2008-09, etc.).  During each time frame, the global equity markets declined considerably, only to recover in the coming months / years. 

As clients of SWA, you likely already know that we are not emotional investors.  We don’t try to time the markets by making short-term decisions that could undermine the long-term investment strategies of our clients.  Instead, we work with clients to determine a long-term investment strategy that will work well, over time. At the same time, we completely understand that over the short term, equity markets could very well be exceedingly volatile.  The primary reason we choose to invest client portfolios in this manner is that this strategy has been proven to work, time and time again.

That said, those that attempt to “time” the equity markets are faced with two critical decisions that are nearly impossible to get correct, in our opinion:

  • When to get out of the equity markets and;
  • Just as important, when to get back in.

We understand that globally, things may look somewhat bleak at this time and it may be hard to “keep the faith” that life will rebound, and your retirement savings will rebound with it.  It’s in times like these that I remember the phrase “the more things change, the more they stay the same.”  This is history’s way of telling us that those that remain patient and stick to their long-term investment strategy will likely come out on top.