As Covid-19 crisis continues, I have heard folks complain about the expression “unprecedented times and uncertain times”. However, the reality is that we are truly living during unprecedented and uncertain times. We have had pandemics before but not on this scale in recent years. The global pandemic of 1918 was in a far different time when global air travel was not as easy as it is today. Our team at Harford Financial Group continues our commitment to service, providing value, and building and strengthening relationships. Our Financial Service Professionals are balancing contacting and talking to clients with continuing to do research and staying on top of the situation.
At the end of the article, we will share some insights that we feel are prudent to how capital markets may respond along with a guide to recessions to give perspective. Before that, I wanted to share some perspectives that may help you during this time. In February before things really hit hard, several of us had chance to meet and listen to Jason Redman, a Navy SEAL. He and his unit were ambushed by Al Qaeda and he was shot in the face. Had the bullet been a millimeter different, he would have been killer. Jason shared with us his story of overcoming this and other things in his life as well as lessons of leadership. It was truly inspirational. I hope to be able to bring him to Harford County sometime to talk to everyone directly along with making video for our clients who do not live here. In retrospect, I believe his story was like a premonition to get our team ready for the challenges we presently face.
Since that time, I have read his two books as well as one from another Navy SEAL, Mark Divine, and watched countless documentaries on Navy SEALs. Having served in the Navy in its Nuclear Propulsion program, I have always been intrigued by Navy SEALs and military special operations like Army Rangers and Green Berets. I looked into the Navy because of the SEALs but was encouraged to look into the Nuclear program. Looking back, as much as I tried to stay in shape through wrestling in high school, I now know that Navy SEALs are unique breed and not sure if I would have mental make-up to endure the hardships of their training and Hell Week.
In studying military Special Operations personnel, they have an attitude that is called Embrace the Suck. The brunt of it is that one will have to mentally endure hardships. For instance, they go out in the surf in 40-degree weather, get wet, and then roll around in sand called sugar cookie. They then lay in the water for hours. Their training conditions and teaches them that they can make it through tough times and face the unfairness of life particularly in their case where operations do not go exactly as planned. As I have thought about this crisis, embracing the suck has given me the grit, determination, and ironically peace of mind to get through this. It made me think of the Stockdale paradox named after Admiral James Stockdale who survived 6 years as Prisoner of War in Vietnam and was Ross Perot’s running mate in 1992. Admiral Stockdale won the Congressional Medal of Honor for his valor during his time as POW. The Stockdale Paradox discussed in Jim Collins’ Good to Great was that POWs who were blind optimists generally did not survive because as things went longer, they would lose hope. Admiral Stockdale believed that one had to have pragmatic realism where one maintained optimism but understand things would be tough. He said this, "You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be."
In some of the recent calls we have participated, because of the uncertainties around the pandemic and not knowing those timelines, the financial timelines are dependent on the health aspect. Several managers have told us that their financial models will have greater predictability once the economy starts to open up. In recent weeks, the markets have showed positive signs which is encouraging. However, we will not be surprised of future downsides throughout the year and possibly lower than the lows experienced in March. For most folks, bear markets and recessions are factored into your long-term plan and actual portion invested in stock is for money most likely one would not touch for at least 5 to 10, 15, or 20 years. We at Harford Financial Group have the belief like Admiral Stockdale, ultimately, we as country and global community will get through this to brighter days but want folks to be prepared for the bumps along the way. We want you to channel your inner Navy SEAL and embrace the suck!
The link below will take you to American Funds Guide to Recessions. We use a lot of American Funds material because it is well written and graphically shown to best communicate to our clients without getting too much financial professional jargon and into the weeds.