I know how you are feeling right now. I’m feeling it too. In the past month, stock markets around the world have been hurtling downwards like Felix Baumgartner skydiving from space. I remember watching him slowly, slowly rising up in his helium balloon towards space, the anticipation growing like a seed in my belly. Palms sweating as he opened the hatch and plodded towards the edge, pausing to double and triple check everything. I was as nervous as Felix was calm. When he suddenly stepped into freefall I gasped a little and then was transfixed as the cameras struggled to keep up with a human being falling to earth at Mach 1.

We know the outcome of the Felix’s jump but there was a moment during freefall where he was spinning faster and faster and it felt like it was on the edge of disaster. The past few weeks, as Covid19 jumped from China to countries in Asia, Europe and finally, North America, the stock market has felt like that moment when Baumgartner spun uncontrollably. A 30%+ drop in a month is an unprecedented event so it’s entirely natural to feel like your lunch is about to come up. To feel like you will always be spinning down towards earth with no way to stop from falling.

I know it doesn’t feel like it right now but this drop will eventually stop feeling so out of control. The wild moves in the stock market will eventually dissipate as we all begin to understand the economic impact of Covid19. How long will it take? I honestly don’t know. That’s the scary part of being an investor. Not knowing what will happen in the near future is the risk that all investors take when they put money to work and that is never going to go away. Neither should it go away because that risk is what makes the returns for stock investors over time. The price of getting better returns is that sometimes you have to feel like you are about to faceplant against the earth at Mach 1. Nothing is truly gained by standing on the precipice of space and staying put.

In our industry there is a saying that gets trotted out almost every day: “I don’t know whether the next 10 or 20 percent move in stocks is up or down.” It’s foolish to think that you, or anyone, can predict the ups and downs with anything approaching regularity. This saying is our way of telling clients that to expect that we can predict anything about the market is folly. In the case of Covid 19 and the market volatility that has accompanied it, I definitely don’t know if we are at the bottom, near the bottom or still have more pain to come.

Here is what I do know and it’s the second half of that saying above. This isn’t the end of investing or the economy. We will recover from this virus and get back to work. The next little while won’t be easy and there are people you will know that will pay a huge price with their health or their business. It won’t be an easy recovery and it will require all of us to put petty differences aside for the good of the many. What gives me reason to say this? Experience. At the start of 2009, during the nadir of the Global Financial Crisis it felt like the entire financial system was crashing and bringing down everything with it. There was no reason to ever own stocks at that point, and yet…

(Source: https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years )

Being an investor, especially in stocks, requires you be full of hope and optimism in the long term progress of humanity. I am full of both, even today, because I know we will get through this and come out on the other side with new ideas for growth and new ideas to make the world better. It doesn’t appear that way right now, but it will happen and when it does, that’s when you get those big moves higher.

 

About a third of the way down towards Earth, Felix Baumgartner began to spin. It seemed like it would never end but with skill, perseverance and a heck of a lot of guts he corrected and saved himself from disaster. It was one of the greatest accomplishments in human history. Beating Covid19 will be another one to add to that list, and we will do it with skill, perseverance and a heck of a lot of guts.