We Have Been Here Before

Many of the same emotions as 9/11 and 2008 have returned

By Jon Aldrich

As all of us that lived through it, I remember September 11, 2001 very well. One of the things that has always stuck with me was how gorgeous a day it was across most of the country. The sky didn’t have a cloud in sight, and there were also no planes to be seen as everything was grounded after the attacks. I remember watching the events unfold that morning as I was getting ready to go into work. I was eating cereal with my oldest son, Trent, who was about a year and a half at the time. We watched as that 2nd plane crashed into the tower, and the sense of dread that overtook me was unpalatable. I remember telling Trent that he was witnessing something that will be spoken about for generations. Of course, he has no recollections of that day, but I think of that day often. It was a dark time for us, but we eventually recovered and became stronger.

I also remember the darkest days of October and November 2008, when we were in the midst of the financial crisis. The market went down relentlessly as we watched the clowns in Washington argue along partisan lines about what should be done. You know, never let a good crisis go to waste. Of course, it wasn’t for the best interest of the country it was for the best interest of the party. Eventually, they finally passed some fiscal stimulus that would lead to the eventual recovery, it just took a while to accomplish. I recall the dread back then as well. Those were some dark days, but we eventually recovered and became stronger for it.

As I look back on those two events that had an indelible impact on my life and how they made me feel, I now have that same feeling of despair as we continue to hear the news of the COVID-19 outbreak and see the markets doing the same things they did back in 2001 and 2008. You can cut the panic that is out there with a knife, not only in everyday conversations with people, but in watching market participants. I remember, back in 2001 and 2008 that things will never be the same again and they weren’t. The same applies now, and after we get through this, which we will, things will likely be changed forever, and we will be stronger for it.

It is not going to get better overnight, and it probably has to get worse before it gets better, but we will persevere. Just like the events of 2001 and 2008, our lives are going to be disrupted for some time, but we will adapt and will get used to the changes in our everyday lives.

In our portfolios, for those that live off the income, we have always kept a couple years of spending needs in conservative investments, such as CD’s, short term bonds, etc, that don’t generate a lot in the way of investment returns, but that we know are going to hold their value in times like we are experiencing now. This means we do not have to sell stocks at depressed prices to fund monthly spending needs.

For those of you still working and growing your portfolio’s, it is an opportunity to put cash to work if you have it. This is only a temporary setback as 2001 and 2008 were.

In our financial plans, we have modeled the impacts of bear markets and recessions. We always knew there were going to be bear markets and that they were not going to be any fun when they occurred, but that we will get through them. The plans were stress tested for these types of events. Well, we are now in that bear market and likely recession, and it is not any fun.

There are going to be opportunities to rebalance soon. It always feels horrible when you are buying things that are down and there is so much fear out there, but that is when it works best.

We are all uneasy with how things are playing out and it seems to be uncharted territory, but I recall those same remarks being said at 9/11 and during the Great Financial Crisis.

Be Well & Stay Safe.