Mind on Money: Be prepared for Opportunity
Sometimes the price of freedom is doing what we have been asked, so we don’t have to do what we are told. These unprecedented times call for an unprecedented steadfastness in our collective decision making. I have faith Americans will begrudgingly but quickly rise to the challenge.
Individuals, families, healthcare pros, companies and governments are all tasked with things none of us want to do. I think we all know what we have ahead of us, we now just need to get to it so we can get past it.
From the perspective of an investor, the current financial market environment can only be described as brutal. On a primal level, the stock market over the short term can function as a gigantic and high-profile social barometer. We all feel crabby, scared and exhausted, could we expect anything else from the market?
In the presence of overwhelming emotion, however, as investors we are tasked with an attempt to be logical. For investors using stock market-based investments properly, none of the money invested in stocks before the crisis should have been needed for cash or spending needs for many years. So, a long-term perspective can still be in place, and should provide some reassurance.
With this in mind, at this point in the crash (yes, I said crash) for those who are invested (I personally am) in the stock market, in my opinion the focus should be on quality. There are amazing companies trading at prices not seen in years. For investors using index investing, this might be a time to do some cherry picking of individual stocks in our strongest American companies, or perhaps even reposition some funds toward similar types of investments, aka stocks to stocks, using active managers. If there is ever time for an active manager to show value, my thought is this could be the time.
For investors finding themselves with money needed for short term financial needs exposed to stocks, we now have a ruthless reminder of why we don’t do that. The stock market is not an app we play on our phones. When the algorithms and volatility enhancing program trading take control of markets, individual investors can be quickly victimized. If money invested in stocks is needed for a tangible, shorter term goal (tuition, retirement income in the next 12 months, a major purchase), there may be opportunities to unwind this mistake during the crisis, and if you need advice on when or how, please ask someone.
Which brings us to the next point of logic. My next point of concern as an investor is now “the fear of missing out (FOMO).” The marketing people say FOMO is a primary motivating factor for our Millennials, and not so subtle FOMO advertising is all over TV. I guess this buzzing feel of anxiousness and impatience I am experiencing right now is what it feels like.
Based on my experience as an investor and an adviser, and based upon the many daily research reports I am digesting from economists and investment companies, at this point I believe when we look back at the market’s eventual recovery from this crisis the word to describe the recovery will be “vicious.” Vicious to the upside.
At a time when we are swooning over the declines we have endured, at a time when we are rightly focused on our families, our co-workers, our companies, our communities and our health, there will be a window.
A window that may not be when the dust clears, but perhaps rather right in the middle of the storm, when those who are prepared, and those who have the presence of mind to act (I mean buy) realize amazing opportunity to recover and enhance. I want to be ready.
Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at firstname.lastname@example.org. Securities offered through LPL Financial, member FINRA/SIPC.
To view Marc's past articles please visit https://www.nwitimes.com/business/columnists/f-marc-ruiz/