Our main message is a simple one: Whatever happens to your investments in the short run, you will be fine in the long run because the world is resilient.
Give Your Amygdala a Timeout
Before we think about the long run, we must recognize that our current situation induces anxiety. Few of us are immune to the outcries of the irrational, instinctive part of our brain—the amygdala—which scientists tell us is most persuasive in times of crisis. The amygdala helps coordinate responses to perceived threats in our environment, especially those that trigger our survival instincts. It hijacks reasoning and incites a flight or fight response. We get it. It happens to us also. To deal with it, we need to learn how to tame our brain.
If You Name It, You Can Tame It
With time, the amygdala will calm down and you can deal with your fear and emotions. You can expedite the process by naming the fears: “I’m worried about my financial future;” “I’m afraid of the impact this will have on my retirement;” “I worry about my family’s health;” etc. Putting a label on your fears helps trigger the rational side of your brain. This allows you to approach the situation with mindful presence and a mindful response. We find that taking a deep breath, slowing down and focusing your thoughts can help.
Once Calm, Take the Long View
As you know, there’s no way to predict the future and therefore the only way to prepare is through built-in resilience. When we assembled your portfolio, we didn’t know there would be a global pandemic. But we knew there’d be something. There’s always something. In the last 40 years there’s been Black Monday, the Dow’s largest one day drop (and the reason there are built-in circuit breakers), followed by the first Gulf War, the Dot-com meltdown, 9/11, and the Great Recession (to name a few).
Most investors can still remember how scary the last one was. Indeed, how terrifying it was. Yet every time, we persevered, we survived, and our portfolios came back.
Built-in Resilience
There are over 13,000 stocks in your portfolio. They span the globe and cover every major industry. They will only fail to recover if the world fails to recover. We don’t believe that’s possible. Human beings are resilient by nature; they adapt, they always come back. So will your portfolio. And ours, for that matter, since we invest the same way you do. And if you’re living off your portfolio, you have four or more years’ worth of spending in cash and bonds. That’s a lot of time to give the world and humanity a chance to come back from this. And not only will humanity come back from this short-term dislocation, we’ll come back stronger than ever. When the Coronavirus turns some invisible corner, and the end is at least visible on the horizon, markets will come roaring back and anyone on the sidelines will miss it.
Meanwhile, In the Short-Run
Until we reach that turning point, please stay safe. Hunker down with your loved ones and watch movies and read your favorite novels, but don’t worry about your portfolio. It will continue to take care of you if you currently depend on it, and, in all cases, it will come back, along with a resurgent humanity. In the meantime, we’re thinking about you and all of your financial needs and making adjustments where they make sense. Please reach out if you have any questions, concerns or just want to talk. We’ll all get through this.
The Meritas Team