GROWTH THROUGH THE PANDEMIC AND BEYOND

July 01, 2020

Gardening in some form or fashion has always been an interest of mine. I have never actually had a vegetable garden, and during the pandemic tried to start one.

I grew tomatoes from seed, and surprised myself. I had well over 300 seedlings sprout! It looked like I had a greenhouse in my living room!

The process of planting the seeds, nurturing, watching them grow was laborious but rewarding. I learned more about thinning out plants, transplanting, and re-planting more than I ever thought I would want to know.

Luckily for the plants, I was able to give many of the seedlings to other gardeners and to a new home in the ground for them as well. I decided that the process of having an in-ground garden in my yard was more than I could handle at the moment, so I opted for keeping the now 20 or so plants that I have in containers instead.

So what does this all have to do with financial planning and investing? I look at it as a metaphor for growth, certainty in uncertain times, and positive momentum. The potential energy within a seed to grow takes positive momentum.

I did not think all of the seeds that I planted were going to germinate, but a lot more did than did not! Once this potential energy is released, positive momentum takes place and you have growth. There is certainty in that process as it is a law of thermodynamics (biology, chemistry, physics/energy transfer), and of the universe.

Planting the seeds of financial planning, investing, and consistency in these actions will produce long term growth, bearing future fruit in this lifetime and beyond.

Over the last 16 weeks, from the height of the S&P500 on February 19, 2020 of 3386.15 to an unprecedented drop of 34% in 33 days to 2237.40, and then followed by the best 50 days in the equity markets ever, we have been through much volatility. This brings us to today June 30th 2020 as of this writing where the S&P500 is around 3100.29, down about 8.44% from the February high.

Over this same time period it was predicted that the economy would sustain a job loss number of 7.5 million, when it instead- gained 2.5 million. Of all the economic strategists, and prognosticators in the world, none of them forecasted any of the above statistics.

The point is- that the short to intermediate term course of the economy and the markets is always perfectly unknowable. It is impossible to make intelligent investment policy based on a relatively near-term outlook. The only certain way to capture equities’ superior long term returns is to sit through their occasionally steep but historically temporary declines.

The Great Companies of the world are always finding ways to grow and innovate. We are all part of that growth through our diversified investment portfolios. We are long-term, goal-focused, planning-driven, patient, disciplined investors. Our focus is history rather than headlines. If your goals have not changed, there is no reason to change the plan, nor to change the portfolio substantially. This is even more important to continue to remember while going through this pandemic and beyond. 

Investors will still have to deal with what may be the most widespread civil unrest in our country in decades, and what promises to be a bitterly partisan presidential election cycle. Emotions seem likely to continue to run high, with unpredictable short-term market consequences.

While in the midst of uncertainty, unknowability, it can be uncomfortable, even unpleasant. Just remember that the trend lines are always positive; there is a silver lining, and of course tomatoes from tomato plants (hopefully!). Be well ~ remember optimism is the only realism!