Market Pulse

March wasn’t a great month for markets posting declines of 4.2% for the Dow, 5.8% for the S&P 500 and 8.2% for the Nasdaq. Declines like that usually capture some attention but when the first few trading days of April created a double digit decline for the major indices, suddenly losing 4 or 5% for an entire month or even a quarter feels nominal. Not to be outdone, less than a week   later, markets rallied in a similar fashion.  An on-again, off-again approach to tariff policy created a nearly double-digit surge for the beaten down markets.

Without sounding like a broken record, it feels like we are in unprecedented times again.  Therefore, you’re not alone if you’re tired of feeling like we are constantly on the verge of one disaster after another.  A popular question that is often posed to people who during times like these is, “If you had one wish, what would you use it for to make things better?”  I think the most likely answer would be to ask for 10 more wishes instead of just one.

Kidding aside, whenever problems arise, so too does the need to be resilient.  This is a point I learned as a kid by playing a variety of sports up to and in college.  On a regular basis,   we faced bigger, better teams and even when we may have been favored, we could find ourselves down and out with our backs against the wall.

But nobody back then had a magic wand and none of us were taught to give up, give in, or to be quitters. Furthermore, we practiced all the time for situations like that.  We knew   execution was important which included sticking to our role and following the plays.  We also had some strategies to reframe the situation and our mindset.  I’m referring to things like rally caps (turning your baseball hat around to spark a rally) and of course a handful   of trick plays to mix things up and catch others off guard.

That’s a long way of saying that despite what the score for the markets may be or what the new administration  may be doing, now more than ever is the time to fall back on what we have been preaching and practicing for years. Like sports, execution is important and so is following the designed plays. For us and our clients, that simply means relying on the    resiliency of dividend paying stocks, as well as income from preferred stocks and bonds. 

While there aren’t necessarily any “trick plays” for the stock market and you won’t find  me wearing a baseball cap backwards in the office, we can spark a rally in confidence by    buying into long-term opportunities when markets are well-below recent highs and at     attractive entry points.

As you might expect, we didn’t win every game when I was playing sports. Similarly, it’s not about winning or losing in the stock market, but rather how you play the game while getting the most out of it. 

With that in mind, it’s worth noting that I didn’t mention inflation, overemphasize tariffs, or other recent economic data.  All of which are important factors that we do watch and monitor in conjunction with many others.  But right now, the biggest opponents we all   face aren’t those common headwinds but rather the value to see, react, and respond to the current environment with resilience and discipline. 

The Ostrich Myth
 

Ostriches are the largest species of bird, who lay the biggest eggs, and despite not being able to fly, are extremely fast runners, capable of reaching speeds of up to 45 mph. It may also surprise you to learn that an Ostrich doesn’t bury their heads in the sand to avoid danger.  However, they do dig holes to nest their eggs.  After which point, they put their head in the hole to turn the eggs. So, it looks like they are burying their heads in the sand, but they are not.

As you know the “head in the sand” myth has been taken out of context and been perpetuated to a point that everyone assumes it to be true.  In fact, it’s a common metaphor for individuals or organizations who fail to adequately prepare for or respond to problems, hoping that by ignoring them, they will somehow go away.

It’s interesting because I think there are a number of things we can learn from Ostriches about the world of investing as well as retirement.  To start, I recently caught a headline where a respected CEO was reported to have said, “We are headed for a recession.”  So, I proceeded to watch the video where it became abundantly clear that we he said and what the headline implied were two very different things.

The click-bait worked.  I followed the link and watched the interview which is exactly what the media site wanted.  Turns out the CEO echoed my own sentiments that if certain things continue, go higher, or get worse, then the odds of a recession go up.  Unlike the headline, the story doesn’t proclaim an imminent recession or even provide economic data to suggest we are knocking on its door. 

The point is that it is more important than ever to read the story not just the headline.  Like the Ostrich myth, now is also not the time to bury your head in the sand.  Yes, I do think things will improve over time, but understanding more about what is going on and why it’s going on can actually give you a mental advantage as an investor.  In other words, reading beyond the headlines can help you see what is really happening and help you work through the situation rather than going around it.

Ostriches are sometimes ridiculed in the avian world for their awkwardness in terms of their imposing size, long legs, and inability to fly.  But digging a little deeper, Ostriches have a history of thriving in the harshest of environments, showcasing unparalleled adaptability.

An approach and style that new, soon-to-be, and existing retirees can also considering embracing. There are a number of myths about retirement that can trip people up and cause them to struggle with the initial phases of their transition.  For example, retirement is often portrayed as the perfect, ideal time of life where things come together for an   individual. However, for those people who are unprepared for the non-financial side or psychology of the transition, it can anything but that.

It’s not uncommon for people to learn the hard way that you can lose more than you gain in the process of retirement.  Or that there can be a dark side to retirement that includes isolation or depression.  All things that can make you want to bury your head in the sand, but just as we mentioned above, it’s really about understanding the whole picture of    retirement, rather than assuming its one particular way simply because that is what you were also told or heard.