Do you remember when people put on dress clothes to travel and then smoked on planes? Do you remember when seatbelts started being required? Perhaps when email was created, or when eBay and Amazon became household names? When you got your first cell phone and then your first smartphone?
In 1968, wearing a seatbelt in a vehicle became a legal requirement in the United States. It wasn’t until 2000 that the United States banned smoking on all flights to, from or within the country. But before that, it was common for people to smoke on airplanes. We don’t know what new requirements the future will bring; only time will tell.
As Justin Trudeau said, “The pace of change has never been this fast, and it will never be this slow again.” Change is normal—not a “new normal,” as we keep hearing in the news, but just “normal normal.”
Change can be difficult, and the pace of change continues to accelerate as technology leads to more technology being developed. As we hear more about how the pandemic will change lives with more digital interaction, face coverings and other requirements, this is nothing new. Again, this is not a “new normal”; this is “normal normal.”
We Will Always Face Uncertainty
As we look forward to balance of 2020 and beyond, we will see businesses, communities, individuals and the country change and adapt. New ways of doing things can provide opportunities for those who evolve and challenge for those who don’t. Can you imagine not having a smartphone or at least a cell phone today? Sometimes the best, most profitable opportunities emerge from unexpected and even negative situations.
According to the Wharton School at the University of Pennsylvania, seeing the opportunity during times of crisis requires that we change our mental model. “Instead of viewing the present situation as a short-term necessary evil that we should try to leave behind as soon as possible and return to a comfortable pre-crisis past, we should ask how to use the current situation to speed up long-overdue changes.” Each of us can weather the storms around us more effectively if we adopt this mindset.
Uncertainty about what might happen next can lead to both personal anxiety and market volatility. Markets can handle bad news; however, uncertainty tends to result in increased volatility. Proper wealth management takes into account both what we know and what we don’t know. We need to hold some funds for near-term needs while investing to meet long-term goals. Personally, we need to know that the unexpected will happen. We have faced tremendous challenges before as a country, and we came through them all. We will prevail through the COVID-19 pandemic just as we have in the past.
Focus on the Long-Term, Avoid Making Decisions in Panic Mode
During uncertain times and times of unprecedented change, the danger, both from a mental-health standpoint and regarding investing, is making decisions in a panic mode due to a short-term situation, rather than looking at the long term. Selling when markets are down only locks in losses and exposes investors to other risks like inflation, transaction expense and income tax.
Given the negativity in the media, it’s no wonder we feel like things are constantly deteriorating. We continue to be bombarded with negative news about the pandemic, crime, race relations, politics, the economy and more. Those with vision and courage will not only feel better but can benefit from the opportunities that are hidden behind all the misinformation. Once again, this is not new. More than 200 years ago, Thomas Jefferson wrote, “Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle.”
I expect a lot more volatility in the markets and portfolios, along with a seemingly unending stream of panic-inducing media coverage in the coming months. Don’t fall for it. Have a plan, and stick with your plan — for the sake of both your personal mental health and your wealth management.
Extinguish your cigarette, buckle up, get your face mask on, and look to the future with optimism, even when it feels uncomfortable. As always, we are here for you, and your vision is our priority. We have navigated many storms together, with our eyes on the long term, and we will continue to do so.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Randy Carver and not necessarily those of Raymond James. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.