A brief note on what I learned from 2008 and how those lessons can apply to todays challenging times.

Over the past 10 years or so I have listened to stories from Investors about all of the mistakes they have made as a result of the 2008 Financial Crisis. I heard things such as…

• I wish I didn’t sell out all of my investments, I should have held on.

• Should have never stopped contributing to my 401(K) in 2008 and 2009.

• I wish I had more cash available at the time to invest, especially had I known how fast the market recovered.

I wish, I wish, I wish…

I’m not judging, 2008 was a tough time. Banks were going under, home values were slashed, trillions of dollars were lost, the future very uncertain. Retirees were forced back to work, many still in the workforce had to put off retirement, there were countless bankruptcies, and kids’ college funds trashed. Dow Jones Industrial Average was cut in half, some stocks went down 70, 80, 90%! It wasn’t just the banks, the decline was broad-based. As a reminder, Delta Airlines $DAL, American Airlines $AAL, and United Airlines $UAL all trade below $4 in 2009. As an advisor it was challenging, every day felt like groundhog day, I still get chills thinking about it.

But I’m thankful!

2008 did not teach me how to correctly predict the next bear market rally, identify Warren Buffett’s next acquisition target, or how to identify the market bottom. The lessons learned were far greater. 2008 taught me how to deal with negativity and manage emotions during a period of crisis and uncertainty.

Now it’s logical that during hard times you can get thrown for a loop and sometimes the mistakes we make with our money when things get unusually stressful only become clear months, years down the line. So what can you do about it?

Forget about tomorrow

Avoid getting caught up in what’s happening right now. Forget the short term. Shift your attention, focus on the future, long term, Visualize next year this time, 2 years from now, 5 years out, 10 years. Big picture.

In 2020 we had the fastest decline in the stock market since the Great Depression.

Our economic stability has been dented. Households with little or no emergency cash reserves are concerned about paying bills. Many have requested forbearance on their mortgages. Millions of workers unemployed. Many small businesses’ are closed, sadly may never reopen. According to the IMF, the global economic outlook is bleak. The future is very uncertain, our humanity threatened. While the market has recently recovered a bit we are unsure about the short and even medium-term.

“When investing, pessimism is your friend, euphoria the enemy.” Warren Buffett

Don’t let investing pass you by in 2020

To be clear, the stock market is going to do what it is going to do, and it does not HAVE to do anything in particular. Further, there is no clear evidence that the bottom in the market HAS to be re-tested or a further or deeper correction is required. These are just phrases the financial media uses. These events may or may not occur. The bottom line is the stock market is unpredictable, as is the future.

Now it’s real easy to get negative here. People are still dying from COVID-19 every day, we are still being restricted on activity in some parts of the country. We can’t go out to eat and sit in a restaurant, and going to see a sporting event or rock concert anytime soon is doubtful A majority of Americans’ income has been affected in some way. Consumers are being cautious here. The stock market is volatile, our future uncertain.

Trying not to be so negative, glass half full, I learned this in 2008.

There are companies trading on the stock exchange with strong balance sheets, whose stock prices are trading at discounts. Companies are learning how to adapt to remote working conditions, cut costs, and be productive despite the current adversities. Other companies are outright dominating in this environment. To top it off, the Federal Reserve has been highly accommodative during the pandemic fueled economic downturn.

“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible,” Fed chair Jerome Powell

You need a plan

Many of my clients plan to stagger new investment capital into the markets over the next couple of months. Rather than focus on timing the stock market, we are using our resources to find value plays with growth potential over the next 1–2 years.

In 2008 many stood on the sidelines. My best advice to overcome a similar outcome, put less emphasis on the short term and more on the long term. Contact your advisor, (me), make this time different.