First and foremost, I do hope this message finds you and your loved ones healthy and safe. In times of crisis, we are reminded of all the things that matter the most. Family, friends, loved ones, and your own mental and physical well-being are paramount. Please do take care of you - and of them.
With each passing day events are happening and conditions changing at what seems like warp speed. Just a few short weeks ago our lives were normal, financial markets were thriving, and all seemed to be well with the world - literally, and figuratively. Now, practically overnight, our worlds have been turned upside down.
I understand. We are each processing recent events in our own personal ways. I, too, have gone through a range of emotions. How could anyone not in such times? We are, after all, only human. I’d suggest it’s analogous to being in the initial stages of grief. What started as shock and denial may have since progressed to pain, anger, or depression. Where each of us are in this progression will vary, but I suspect that most remain somewhere in these early stages. Although few may see it at this moment, I’d remind everyone of the most important and final stage: Hope.
My obligation to you and all my clients is to provide trusted advice. I take this obligation seriously as I hope all of you know. I owe you nothing less than my honest thoughts, feelings, and opinions. I have done so in the past, and will do so again now. You are free to accept my advice, or ignore it, and act accordingly as you wish. But it is my responsibility to share what I believe, and offer any personal insights or guidance that may be helpful.
During “ordinary” market environments which typically depend upon the natural ebb and flow of the economy and business cycle, financial advisors and money managers often resort to the “fundamentals” when making crucial investment decisions and providing related guidance. Such fundamentals include corporate profits, earnings growth, P/E ratios, and other key financial and economic indicators. We form our own respective opinions and conclusions on these fundamentals, and advise our clients accordingly - sometimes using financial jargon that, candidly, many may not understand. This is not a time for such jargon, nor for any misunderstanding. My thoughts and opinions that follow should be clear, and any choices you might wish to make in that regard should be made given your own individual viewpoints and circumstances.
The question most investors and clients are asking is: “Do I stay the course, or not?” The answer to this question, in my mind, should be based upon your answer to another question: “Do I believe in America, or not?” Ultimately, the future of our economy and financial markets really boils down to whether or not our country succeeds, or fails, in overcoming the current COVID-19 global health pandemic and in mitigating the effects of a looming severe recession, at minimum, or the next Great Depression, at worst, in the days, weeks, and months ahead. It’s as simple as that. That’s the only “fundamental” that matters at this critical juncture in our history. How you feel about whether or not America succeeds or fails should guide you in your choice. Although the choice is yours alone to make, as with any crucial financial decision I want you to be properly informed and weigh all the relevant risks, rewards, costs, benefits, etc. accordingly. If you want the honest and heartfelt advice you’ve become accustomed to receiving since entrusting me to be your advisor, however, I offer the following:
Believe in America. I do.
Statements I often hear in the media and among those laced with fear and hopelessness:
“It’s different this time. REALLY different!”
“This is UNPRECEDENTED.”
“The World has changed. It will NEVER be the same!”
I agree. The above is indisputable. But the same could be said on December 7, 1941 when the Japanese bombed Pearl Harbor and the United States abruptly entered World War II. The same could be said during the Cuban Missile Crisis, and on November 22, 1963 when John F. Kennedy was assassinated. The same could be said on September 11, 2001 when America was attacked on its own soil and the Towers fell. Anyone who lived through such tragic events remembers all too well where they were, and how they felt. It was different then, too. Really different. Unprecedented. The world was, indeed, forever changed. We had no playbook or predetermined script as to how to respond, what would happen, or what the ultimate outcome would be. Yet America prevailed because of blind faith alone, and her inherent character, spirit, resolve and determination to succeed in such times of crisis. As JFK eloquently stated in his January 20, 1961 inaugural address, “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty.”
The threat this time is not an enemy nation, but a similarly dangerous foe - a hidden but lethal COVID-19 virus. Throughout its history, America has sent its young men to enemy lands to defend her liberties and freedoms countless times. Our “Greatest Generation” fought in Normandy and prevailed against insurmountable odds in World War II. We sacrificed within our own shores at that time as well, redirecting manufacturing efforts and adapting as necessary. We did whatever it took to prevail, including sheltering in place and living in fear - not knowing if the alarms signaled a legitimate threat or just a drill. Now, at this critical moment, it is OUR time to sacrifice. It is OUR time to redirect manufacturing efforts and adapt. And it is OUR time to be great.
I believe in you. I believe in us. History will judge us not merely for ONE great generation, but for MULTIPLE great generations coming together with a similarly united purpose to defeat a new common enemy. Regardless of the perceived odds, insurmountable or otherwise, I am confident the outcome is already predetermined. We will indeed pay any price, bear any burden, meet any hardship, support any friend, and overcome this particular challenge in our history as we’ve done countless times before. We are, after all, Americans. It’s what we do.
Believe in America. I do
-Kevin Smith and Smith Wealth Advisory Group