As originally appeared in The Jerusalem Post on May 14th, 2020.
“Life is not shrinking for me; it’s morphing into a whole new world of possibilities. ” -Peyton Manning
Recently I was having a phone conversation with my oldest sister and after lots of nostalgia, we got on the topic of, what else, Corona. We were talking about all the death and self-inflicted economic devastation and then she put things into perspective. She said, “What can I complain about. I still have a job, a great family, and we have food in the refrigerator- as long as someone feels safe enough to go to the store!” Then she continued, “I am so grateful to be living in Israel. The great and mighty US is being brought to its knees, and everyone is looking to Israel as a place of stability.”
How to proceed?
For the last 3 months, I have received countless calls from asking if they should sell out their investment portfolio and sit on cash until the craziness passes over. Many actually believe that this will never pass, and we are living in a new normal. As I quoted before, the world is always in a state of craziness. The difference here is that in an effort to combat the virus, there has been with few exceptions, global unanimity to close down the economy. I don’t subscribe to the view that this is the new normal, and as economies have slowly stated to re-open, markets have reacted positively. As such my advice is to do nothing.
That’s not to say that you should leave your portfolio on autopilot. There are certain industries that may reap huge rewards, such as telemedicine companies, while brick and mortar retail stores continue their march into oblivion. Will the way we work, i.e. more and more remote work and less office time be sustainable? I know the analysts think the answer is yes, but I am far less certain, and as the recent lockdown showed, individuals crave social interaction. I can’t help but feel for my in-laws as they were more or less stuck in their apartment for 2 months, unable to see their children and grandchildren, and of course their favorite son-in-law! Zoom is great but it’s not like the real thing.
虽然我相信大多数投资者应该仅仅停留过程中，什么也不做，退休人员是不同的。对于退休的投资者没有大的净值不起第二个20-30％的损失的可能性，实用主义应该胜出。对于这些投资者来说，我们可能会进入一段时间，其中保本优先于资本增值，他们应该在他们的投资组合的分配方式的一些变化。我这样说有两个原因。1- They don’t have the luxury of time on their side and the ability to rebuild their wealth in the event of a market drop and 2- because the most important aspect to investing is being able to sleep well at night and not be nervous that a sudden market drop will wipe out your savings.
Let’s say you disagree and think that you can accurately predict the market drop. Now what? From my decades of experience including the last 3 months, you may be able to predict the drop, but you’ll miss most of the bounce back. It’s almost inevitable that that’s what will happen.
If you are worried that the corona inspired economic meltdown will cause even more damage than we have already experienced, speak with your financial advisor to make sure you have the proper asset allocation for your risk level and long-term financial goals.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA. For more information, call (02) 624-0995 visit www.sisoftball.com or email email@example.com.