Stock market swings bring back childhood memories.
I remember when I was a kid, my great aunt and uncle took us to Seaside to go on the rides. I was a little tyke, so the little boats and cars that ride around in a circle was about my speed. But my big brother wanted to get on the spinning teacup ride, and convinced me to go along. Well, even a kid, he was immune to motion sickness (he is now a sailor, lives full time on his boat) - but I was decidedly not. He started spinning the wheel that makes the cup spin like a madman. I quickly became ill and remember screaming for him to stop "I want to get off!!!" As I remember it, the ride operator kept looking at me with this demented grin, and I really think he kept the ride going extra long just for me. That part is probably not true, but in my memory I can still remember the look on his face! It's one of those weird childhood memories that stuck with me all these years.
And this market brought that memory back to me - I wonder why? (but its more a roller coaster than a teacup). Down UP Down Up Down....Stop the Ride already, I'm feeling sick! We went through I think the entirety of 2019 without seeing a 2% move either way in the stock market - suddenly now 2% up or down seems a daily occurrence. We were up almost 5% on Monday, then down 2.5% on Tuesday, up 3% on Weds, now we are heading for steep losses on Thursday. I think maybe we are back where we started the week, I don't know - so all this seems to serve no purpose other than to nauseate investors.
As I discussed here last week, the reasons are understood. An economic risk that is not predictable or understood, computerized trading that feeds off volatility creating more volatility, etc. Sure I can jump off the ride at any time - but that can be dangerous. And we know that ultimately it WILL stop.
But just as knowing the boat will return to port eventually doesn't do much to alleviate a bad case of mal de mer, knowing that this virus scare will pass and markets will settle down is but little solace when markets are acting like a dingy in a hurricane.
Oh there is a cure that does help somewhat with both seasickness and volatile markets. Close your eyes.
Our portfolios have so far behaved as expected through this turmoil. The safest bond funds are up. Riskier bond funds are down a little to flat. Stocks are all down sharply, of course. Our more conservative models are down much less than our more aggressive models, as would be expected. Generally, losses are not all that significant when compared to the double digit gains almost everyone enjoyed in 2019.
If you would like to discuss how all of this impacts your financial plans, feel free to schedule an appointment. You can schedule with me online now at www.calendly.com/financialpathways.
Jim