Schedule a Call

Trying To Time the Market Bottom

March 29, 2020

by Tommy Williams

What an interesting time it is. Another new term for us, “shelter in place.” A whole new normal with which we are summoned to adapt – at least for now. This week I’ve thought a lot about adaptation. You know, like the fact that dinosaurs no longer walk the earth. A huge diverse group of reptiles that became extinct because of their inability to adapt.

In an effort to safely distance ourselves in our firm we are now working with a minimal staff in our office at One Bellemead Centre. Everyone is on a rotating shift so we can be available to clients when needed yet not endanger one another according to the Governor’s mandate. However, if you call our office line you will either hear an “on duty” staff member answer or you will get a menu of numbers from which to select – everyone in the Company is on the list. Upon pressing that selection, your call will ring on that person’s cell phone – whenever you need us, no matter where the advisor or administrative employee might be sequestered. That’s adaptation! We intend to maintain the extraordinary service levels for which we have long been known. 

Recently I’ve been exposed to a few other “new things”. For example, the term “world’s first intentional recession”.  You probably know 70% of our U.S. economy is made up of consumer consumption (that’s you spending money). You are told that you can’t go anywhere that is not absolutely necessary. That shuts things down. Spending is cut to a fraction of what is normal. If you have two consecutive quarters of negative Gross Domestic Product (economic activity) then by definition you are in a recession. Then another first – a tug of war between those who want to get the economy going again and those who want to make very sure that it’s safe for everyone to get back to their “normal” lives. Of course that issue has economic, political and social overtones. And it’s an election year! What an interesting time.

What is my most interesting observation you ask? I think it comes from memories of past downturns. Whatever the cause, I have never seen so many people interested in investing in good deals! America’s great companies are on sale, and everyone seems to want buy something. When my phone rings it is usually about getting fundamentally sound investments at bargain basement costs. 

That leads one to another question. When is it time to buy? Is it going to get worse before it gets better? Probably. How do you know when you are at the bottom and it’s the perfect time to buy? Good luck, because I don’t know. I do know there are bargains out there, so you might dollar cost average in over the next few months. If you are fully invested you might rebalance your existing portfolio to get a similar result. Calling bottoms is a fools’ errand.

One thing is very clear to me. We must be humble. We do not know what we need to know to make dramatic changes in our investments. 

My friend, Jeff Kleintop (whom many of you have met during his frequent visits to Shreveport) is now the Chief Global Investment Strategist for Charles Schwab. Super smart guy. He observes that abandoning a plan right now with the intention of getting back in later could be costly. He goes on to say, we can see this looking back at the last global recession. We saw a big drop recently on March 9th.  Eleven years ago to the day, the stock market bottomed following the global financial crisis. Yet there was no signal that day that it was all over. There was no official announcement or reports of improving economic data. Surveys at the time and for weeks and months afterward showed that most people thought the worst was far from over. But by June 1, less than 3 months later, stocks had climbed 41% from the low of March 9, 2009. Clearly, the market didn’t wait until all the dust cleared – there was a lot of dust still obscuring the view of many in the spring and summer of 2009, yet stocks marched higher and many looking for a signal to get back in missed out. 

I think that’s all one needs to know about trying to time the bottom in the market and get that absolute best price. However, it’s gratifying to me to know that so many of us are optimistic about our country, our economy, our future. Warts and all! Obviously, there is a faithful belief that “this too shall pass.” The true task may be how to meaningfully occupy ourselves as we shelter in place in the meantime.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. 

Visit us at Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered through Private Client Services, Member FINRA/SIPC. Advisory Services offered through RFG Advisory, a Registered Investment Advisor.  Williams Financial Advisors, LLC, and RFG Advisory are separate entities from Private Client Services. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.