A Letter From Michael Conway On Staying The Course Amid COVID-19

Intellectually, we know markets can go down in value, right? And yet when it finally happens, we tend to behave as if we’re stunned. To be fair, the market downswing over the last several weeks has certainly felt particularly violent in its suddenness. And yet the market has gone up for over a decade, with an accommodative Federal Reserve accelerating its upward trajectory.

Now what? Well, we know we don’t want to time the market because it does not work. In moments like this, investors often admit to understanding this reality and yet still seek change because we’re wired to retreat from pain. But we’ve already made the necessary move, having built portfolios that align with the risk profiles and long-term needs of our clients.

Now, we work to ensure investors remain steadfast and avoid the emotional decisions that most destroy long-term portfolio value. It may actually get worse before it gets better. But that’s okay.

I’ve been here before many times. And every time I’ve seen the same. On Black Monday, at the height of the tech bubble, and in the depths of the Great Recession, investors who panicked did little more than capture losses only to later buy back in at premiums. They missed the chance to continually reinvest at lower prices and missed all or part of the upswing. Meanwhile, the calm investors who weathered the storms watched their diversified portfolios do exactly as designed, reinvesting at lower prices and enjoying the return to growth. In the 12 months immediately after the three market events mentioned above, the S&P 500 subsequently rose 21.4%, 33.7%, and 68.6%, respectively. To put it another way, missing just the top 10 performing days over the past 20 years would cut an investor’s gains in half.

It’s nearly impossible to predict how this crisis will unfold. Our thoughts and prayers go out to those affected by the virus, and we’re hopeful we bounce back in a few short months. In the meantime, we’ll be here so you can focus on what truly matters most.

As always, feel free to reach out with questions.


Michael Conway

CEO of Conway Wealth Group

Source: Morningstar.

Disclaimer: The Standard & Poor’s 500 Index (S&P 500) is an unmanaged group of securities considered to be representative of the stock market.