There is no question we’re living in a stressful time, whether it’s financial, medical or social. Who could have possibly imagined on 1/1/2020 what our everyday life would look like today?
We all know that stress management requires physical activity and healthy eating. Honestly, I’m giving it a try every day, but it’s not easy when you’re working long hours at home. I tend to manage stress by looking for more information and data. (I’m sure a psychologist would argue my approach is likely to induce more stress in the end.) Nevertheless, I’ve been reading a lot of research lately on markets, recessions, monetary and fiscal policy, etc., and I’ve listed a few of my favorites below. I’ll leave the medical information to qualified medical professionals, so you’ll find just the financial and economic topics here.
Tiffany and I are very aware that sending frequent emails with layers of data and information can be counterproductive. However, these are unusual times and we are trying to find the right balance of communication and information. Our primary mission is to make sure you and your family are mentally, medically, and emotionally healthy.
We are ready and available to help with your financial questions and concerns. Please send us an email or give us a call if you need to talk. Over the last two weeks, we have reviewed a handful of plans with clients and the results are consistent – the financial plans are still okay. Your financial plan is probably changing daily as we go through this crisis. People are rethinking their spending, travel plans, retirement dates, and everything else. Remember, your financial plan can give you the context you won’t get from watching the global stock markets.
Tiffany and I can help you manage your financial stress and give you clear, data-driven answers to your financial planning questions. You engaged us to create your financial plan for exactly this reason.
Please stay safe and healthy while the world adapts to this new challenge.
Lance and Tiffany
“An Update from Dimensional’s Co-CEOs on COVID-19 Response” – Dave Butler and Gerard O’Reilly discuss Dimensional’s trading infrastructure.
“The Corona Virus and Market Declines” – Dimensional Funds talks about how markets respond to uncertainty.
“Circuit Breakers and Dimensional’s Approach to Trading” – Dimensional Funds discusses recent volatility and market circuit breakers.
Social Insurance Proposal in Crisis – Greg Mankiw – Professor Mankiw offers his suggestions on how to offset the economic slowdown. This is a consistently good blog.
Marginal Revolution Blog – by Tyler Cowen and Alex Tabarrok – My favorite economic blog. It’s currently dominated by research, papers and discussions related to the current situation.
And here are a few charts for a longer-term perspective. It’s important to remember, though, that there is no clarity on when the current pandemic will subside. Trying to time the markets at this point, in particular, is a dangerous game.
- From Dimensional Fund Advisors – Markets recover from market declines
Past performance is no guarantee of future results. Short term performance results should be considered in connection with longer term performance results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.
2. From Vanguard – from a market trough the 10-year projections actually improve.
Notes: Forecasts correspond to the 25th to 75th percentile of distributions of 10,000 Vanguard Capital Markets Model simulations for ten-year annualized nominal returns, in U.S. dollars, based on the MSCI US Broad Market Index.
IMPORTANT: The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of December 31, 2019, and March 12, 2020. Results from the model may vary with each use and over time. For more information, please see the important information below.