There’s a wall of worry in the markets — with the S&P 500 down about 7% on Monday and about 17% off its high, coronavirus fallout expanding, and oil prices crashing.
While advisors need to be holding clients’ hands, they also can heed the words of industry sages about what to do in such turbulent times.
Josh Brown, CEO of Ritholtz Wealth Management, wrote in a blog post early Monday that “This is the Super Bowl for financial advisors.”
“You will see and hear amazing things today and this week — in stock prices, in oil prices, in government and central bank response. It’s going to be a time you’ll look back on. Unprecedented things are taking place … The 10-year [Treasury] has gone from 1.5 to 1 to .5 in three sessions. Utterly historic,” Brown explained in the post, titled “I’m Here, to Remind You.”
“But … of the things that are now still true and will always be true, regardless of what happens: … I can tell you definitively that these are moments when advisor-client relationships are solidified. Not in summertime, when the living is easy, but right now. In the depths. In the middle of the maelstrom,” he said.
Job No. 1? “Helping people contain their fears. Keeping people from doing what might feel like a relief now but is sure to represent a mistake in hindsight. Refocusing people on the reason they’re investing in the first place, and the things they want to be able to fund far into the future.”
This is when adviors can shine, he points out. “These are the environments in which clients’ retirements are saved and advisors elevate their game and come to embody the highest ideal of our profession. Game on.”
As for the matter of why not just sell everything and wait it out, “This is the question every financial advisor is getting this week, from at least one or two clients,” Brown said.
“The great answer is that you won’t know when the dust settles,” he wrote. “There’s no airplane writing the ‘all clear’ in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this?”
It’s important to “be proactive and take advantage of the moment,” the wealth manager says. “Most importantly, remember your ABC’s: Always Be Cool. You only have control of one thing — your own actions. … Be armed with context, wisdom, patience, humility and a sense of humor. See you on the other side.”
Sonders’ ‘Manic Monday’ Take
Charles Schwab Chief Investment Strategist Liz Ann Sonders also shared a blog post with advisors and investors about focusing on what you can control, given that it’s “futile to make predictions about the market with any semblance of accuracy.”
While, these are not “the easiest of times, … being prepared (and disciplined when it comes to investing) is unlikely to make things worse,” Sonders said in her post titled “Manic Monday (Tuesday, Wednesday, Thursday, Friday).”
The current correction is the seventh since the bull market began in March 2009. Corrections in this period have lasted about 78 days on average, with an average drop of nearly 15%.
“Looking longer-term (since 1990), … data shows the average correction has averaged a decline of 18.8% at the low, over an average span of 83 days,” Sonders explained.