I can honestly say I never expected to see anything like we did on Jan. 6, 2021, in this country. Watching the appalling display at the Capitol leads to fear and anger. It can even lead to a feeling of helplessness.
In my 50 years, I have seen some shocking things: the Iran Hostage crisis—lasted more than a year and was a dark time for this country. Black Monday—one of the largest one-day market declines ever. Y2K—all of the computers were going to stop working. The Dot Com bubble—had very similar stock valuations as today. 9/11—who will ever forget that? Nothing worse has happened to this country except for possibly Pearl Harbor, the war in the Middle East, and the financial crisis of 2008/2009. All of these events have left a profound mark on us and our economy.
Most recently, we have been dealing with COVID-19 and a slow rollout of the vaccine. Being locked away from our loved ones while watching a third of the economy literally come to a halt has put our nerves on edge. Coupling that with civil unrest and all riots that have ensued, only intensifies the fear. When people are fearful, they tend to want to try to take back control. Often, the first place they look is to their investments and tend to make knee-jerk reactions, whether good or not for their well-being.
I’ve said it before: An active portfolio decision is to do NOTHING! I strongly urge everyone to think about that sentence. Yes, Democrats swept both Senate seats in Georgia, and Democrats will control all three houses of government. Is not the first time in our history this has happened. In fact, history has shown that this situation can be positive for the markets. The Republicans had control of all three houses in President Trump’s first year of office. The world did not end, and it will not this time either.
Whenever times are worrisome, go back to the basics. Do you have a financial plan? If you and your adviser have created a plan, and there is no need to change course now. I also recommend following the Ten Year Rule to protect your spending for the next 10 years. Consider investing in things people need. At the end of the day, regardless of what side of the aisle you are on, you want to take care of your family. That means a roof over their heads, food, essentials, and funds for education.
I know you’re asking, “How can the market be up with what’s happening in DC?” The market is likely expecting a bigger stimulus package to come out of Congress quickly. On one hand, that could help our economy and fellow citizens who are hurting. Targeted help is needed. On the other hand, someone must pay for all this stimulus. Ultimately, that will mean higher taxes, which are not positive for an economy. It takes money out of the consumer’s hands that could have been spent and gives it to the government, which is not a political statement, but a fact. There are pros and cons to everything.
I still believe this is the best country in the world. Yes, we still have issues, but what family does not? I truly hope cooler heads will start to prevail, and our leaders will find a way to stop the divide. There is enough blame to go around for both sides. From my perspective, money is green. Not red or blue. You should adjust your portfolio when necessary, but right now is not the time.