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Additional Perspectives on What is Happening - Is this Time Different? Probably not!

March 23, 2020

One thing I did not explicitly state in previous message is at Harford Financial Group our mission is to serve and provide value to you as clients and people looking for help. To do this we must push ourselves to be outstanding and to be our best as a team and organization and to be our best as individuals. Two of our values are teamwork and professionalism which encapsulates these values. As a result, we have a personal growth mindset to constantly learn. We have learned that the best financial planning organizations have an obsessive commitment to be the best communicators they can be. We know that during these times of heightened emotion that is crucial to communicate with you. We want to provide perspectives to you and if necessary listen if you have specific concerns.

One thing that some of you know is my aunt Ann was a social studies teacher in Baltimore County. She was an instrumental person in my life when my parents got divorced. She would take me on vacations to Civil War battlefields as a kid and cultivated in me a love of learning and specifically history. I love US and world history. As I have evolved and grown in this field, I have become a student of financial history and the evolution of money. 

I have talked about Ray Dalio, a hedge fund manager. He talks about the need for financial professionals to be a student of financial history. One of the things he says is that there is rarely any event that does not have a historical precedent. Basically, the world financially has gone through booms and busts, periods of great euphoria and panics. We as people like to say, yeah but this time is different. Most of the time the specific facts and circumstances may be different but the overall theme is similar. There is a quote that history does not repeat itself but it rhymes. The following email below emphasizes this. Is this time different? Maybe. If one studies history, probably not. 

We witnessed an extraordinary move in the financial markets on Monday, March 8.

The Dow Industrials lost over 2,000 points, as Coronavirus fears continued to worry investors. At the same time, oil prices lost nearly 25 percent, on news that Saudi Arabia was dropping crude oil prices and raising production as well. Meanwhile, the 10-year Treasury bond yield touched an all-time low of 0.318 percent during the trading session, as unnerved investors looked for some stability.1

In times like this, I frequently hear that some find it difficult to stay committed to an investment program when fear has gripped the financial markets.

But for me, a quick look at recent history helps me keep these events in perspective.

Remember when the trade dispute with China ramped up back in February 2018? In just six trading days, stock prices had undergone a rollercoaster ride on their way to a 10-percent market correction. On February 8, 2018, CNBC reported that the Dow Industrials traveled 22,000-plus points over the course of February’s first full week of trading, due to trade-related fears.2

How about the 4th quarter of 2018? On October 10 of that year, the Dow saw an 800-point drop, largely due to rising interest rates and global economic concerns. And who can forget the holiday market trading two months later? It was a breathtaking event as the Dow lost over 600 points on Christmas Eve, then soared 1,000 points the day after Christmas.3,4

In the past few weeks, I’ll admit that I’ve done a few “double takes” at my computer screen, as we’ve watched major swings in stock prices and movements in the bond and crude oil markets.

But just like always, I am here to help you and your family answer any questions that might surface. Whatever decisions you’re considering, I’d be honored to support you through them. Reach out to me anytime.