Market is the Same, in a Different Way

Personal Money Planning |

By Gary Silverman, CFP®

“It’s different this time.”

That’s a phrase I hear every time I recommend some sage piece of wisdom that is in some way dependent on the gyrations of the economy and usually, more specifically, the stock market. Since we are in one of those gyrating times, I’d like to respond to that statement with two of my own.

Yes, it is different now. No, it’s not different now.

No, I’m not going daffy (though some will tell you that happened long ago). Rather, both are true—it just depends on how you look at things. For instance, take last week’s article talking about what you should do with your check from the government. It mirrored what I had said a dozen years ago during the last financial crisis.

Or take my admonitions a couple of months ago that it was a lousy time to sell out of the stock market just because you were scared. Selling when the market is down 20-30% is a bad idea pretty much no matter when it happens. Again, things are not different now.

But up to now, I’ve never experienced, nor had my parents experienced, a global economic collapse due to a pandemic. This wasn’t due to 9-11, the Tech Bubble Crash, the mortgage-induced Financial Crisis, the Hyperinflation of the ‘80s, or even the Great Depression (the cause of which is still a matter of contention).

No, this one is different.

For instance, during the Financial Crisis a lot of folks lost their jobs. But it was gradual and came in waves. Different industries were affected at different times during the crisis. This time the unemployment numbers shot up almost instantaneously and to record levels. There has been no ramp; there was no wave; there was nothing gradual about it. One day we were working, and then next day we were not.

We therefore don’t know how it will look on the back side when the crisis averts. Surely a lot of jobs will come back quickly, but we don’t know how many businesses won’t be around anymore. How long will it take the remaining ones to ramp up to cover consumer and business needs? How long until new start-ups start up to fill the gap? When will the jobs return? There are lots of guesses, but that is all they are.

Will society change? Will it shift which businesses are winners and losers in the future (and what jobs are stable and are not)? What about our opinions on what power and responsibilities we want to grant government or take away from it as we examine what did and didn’t work right? That could cause or accelerate changes for decades to come.

And how will these changes become a part of us? Will we want to hug more or less? Will a nearby cough cause a brief feeling of panic and dread? 9-11 gave us a renewed appreciation of our first responders. Will we now have a greater sense of thankfulness to those delivering a pizza, checking us out at a retailer, or stocking the grocery shelves? Will that continue?

And, no matter how the markets eventually respond, will it be because of our fear or in spite of it?

For better or worse we shall be changed. How is up to us.

 Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.