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The "Financial Planning Blueprint" Blog

  • Writer's pictureJason Flurry, CFP

The end of the bull market has finally arrived - What it means and what to do next

Did you realize that just one month ago today, we were hitting an all-time high in the stock market? And now just a few weeks later we have entered a bear market (which signifies a 20% drop or more) with today’s drop in the averages.

So what does it all mean and what should you do?

Well, it means that we have all witnessed something this month that has only happened 2 other times in the past 30 years but that used to happen on average about every 3-5 years. The other two bear markets in recent history happened in 2008 during the global financial crisis and in 2000 during the dot-com bust. Before that the market crash in October of 1987 was the other big bear people talked about.

These things happen from time to time and they usually happen fast, just like it has this time. In fact, we’ve been talking about this being a natural cycle of the financial markets for a while and how it was long overdue in coming. So with that in mind, and on the heels of an incredibly strong bull 10+year bull market, no one should be surprised or even alarmed that the bear has finally arrived.

Oh, but they are!

The news media is losing their minds over this drop and the spread of the Coronavirus. However, let’s look at the truth behind what is really going on here.

The World Health Organization reported today that around 80% of the people who have the virus are experiencing only mild symptoms. That means that most people who get sick will likely recover in a few weeks and get back to business as usual. That’s good news, but you’re not hearing a lot of that right now, especially from the financial markets.

As I’ve mentioned before, this is a biological crisis nor a financial crisis. It wasn’t brought on by reckless financial practices, unrealistic projections, or bad economic policies, like the two previous bear markets were. This is a medical emergency the government is dealing with head on and making every available financial resource available to keep money flowing in the economy.

If you trust the community of brilliant scientists who have created vaccines for other more medically dangerous viruses in the past to solve this dilemma soon too, then you can be smart about taking care of yourself, especially in public places, and wait for this storm to pass. We don’t have to have a financial apocalypse over a disease that isn’t killing a lot of people.

The American economy and banking system runs on credit and money needs to be available for cash to flow between businesses and individuals. President Trump and the Federal Reserve have taken drastic, unprecedented steps to ensure that money continues to circulate and keep the economy moving, even if we are all operating our lives from home for a while. That is a key part of the solution here to minimize a recession and help financial markets recover quicker.

Like a fire needs fuel to keep burning, the stock market needs sellers to keep going down. Eventually everyone who intends to sell will and the declines will stop. We may be close to seeing that now, but it’s impossible to know without the benefit of hindsight. I have managed money and expectations through the bear markets of 2000 and 2008, so I do have a game plan ready for how to navigate the challenges we’ll likely see in the months ahead. It’s hard to time the bottom or get all of the calls right in the midst of an episode like this, but I will continue to use sound judgement and the best insights available to steer you through to the other side with your money and peace of mind intact.

I wanted to send this message to you as a reminder that the bear market we’re seeing was expected and to encourage you to relax while I do the heavy lifting for you. No one has ever made any money by panicking

This is a good time to rebalance into some of the areas that are likely to rebound strongly in the future. Some newer, less conventional opportunities are surfacing too that look compelling as we see money rotate from one market to another. I’ll keep you posted as things develop, but feel free to contact me with any questions or concerns you have.

Remember that we’re likely to see these whiplash kind of movements hang around for a little while, so there’s no rush to do anything. We’ll prepare for whatever may be coming next and wait for signals that it’s safe to move ahead again.

Hang in there. Bear markets are never fun, but you’re not alone.


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