As we move past- although somewhat cautiously- the weekends’ Fourth of July celebrations, let us always and forever cherish how far we have come as a nation (containing all its’ blemishes and missteps throughout our birth, as we’ve grown to a world power). Although this is not the point of this essay- the larger message is to be aware of the coming onslaught of “Midyear Outlooks” from the soothsayers which will be engulfing the media landscape, of which your clients will be digesting through all accessible media devices.
You may ask, “why is this of importance to me or my clients?” Well, let me enlighten you as we walk down memory lane- say around 16 weeks ago...
On February 19, the Standard & Poor’s 500 Stock Index hit an all-time high of 3,386.15. Which is nice but it is what transpired next that will bring home the message.
As COVID-19 became a Pandemic- and fear/capitulation gripped investors- the equity markets dropped from its all-time high to bear market area in a matter of 16 days. A first of its kind in all of market history.
As the fear intensified, on March 23 the market closed down 34% at 2,237.40. Just 33 days from said peak. And another first of its kind in all market history.
If this were not enough, it was followed up by the best 50-day recovery. Ever.
Economically- we witnessed one of the fastest economic contractions on record and largest increase in unemployment known to mankind. Then, on June 5 the monthly unemployment report was to be revealed- the consensus estimate was to be for an increase of 7.5 Million more unemployed. Not so, actually a gain of 2.5 Million employed.
Finally, on June 11 as the reignition of fear from the virus surfaced- the market gave back 6%. Just that day alone.
Now to reiterate- ever so empathetically to those in the soothsayer business- the point in the form of a question/statement that anyone with an adult memory must be thinking:
Of all the financial institutions throughout the world, which employ upwards of tens of thousands of economists and market strategists, it should not go unnoticed that each bullet point above was forecast by- you guessed it- none of them.
Following up with the next common sense question one must ask, if all these highly intelligent (which they are) “experts” had very little clue as to the previous 6 months, why would any reasonable investor place any trustworthiness in the next 6 month prognostication?
Has this essay been about “beating up” economist and market strategists? No, well not entirely. The reality or lesson learned is that the short-to-intermediate term is, once again proven itself, unknowable.
It is about re-enforcing a philosophy your clients should be aware of when it pertains to their long-term financial planning. The message: 1) All successful investing is goal-focused and planning driven. All failed investing is market-focused and event-driven. 2) All successful investors act continuously on their plan. All failed investors react continually to the markets.
Be on alert and be the messenger (advisor) of professional, non-emotional guidance of these points as the Midyear Outlook “guessing” begins.
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Market data was sourced using- Thomson One RefinitivJune Unemployment Rate: https://www.wsj.com/articles/june-jobs-report-coronavirus-2020-11593651420"Melone Private Wealth LLC (“Melone Private Wwalth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Melone Private Wealth and its representatives are properly licensed or exempt from licensure.The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
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