My First Bear - Not a Teddy

My First Bear - Not a Teddy

March 26, 2020

At some point in my career, it was bound to happen.   Perhaps I was even on borrowed time.   However, as a financial professional, since I started in the business in 2011, I am now going through my first BEAR MARKET! 

I always wondered what it would be like, being that I was not in the business during the financial crisis of 2008 and 2009.  What would my reaction be?  Would I be too stressed and worried to handle it? Most importantly, how will my clients react?  When will their money come back?

My reaction so far has been “ok.”  The worry hasn’t been so much about me or my family, but more of about my client’s and theirs.  I want to make sure that they understand that based on their risk tolerance and employment situations, whether still working or retired, that their portfolios were prepared for this.  Prepared to either take advantage of the drops or prepare against the losses.

Regardless of whether or not I have gone through a bear market as a financial professional, when I am assisting clients in putting together their portfolios, I can NEVER disregard the fact that they more than likely suffered some loss during the financial crisis of 2008 and 2009.  For those that haven’t, and are still “young” and contributing, then this can represent a huge opportune time to “buy low” – if their risk tolerance will accept that.

When it comes to a client’s reaction, it is obviously something I cannot control.  So, I look at it as there is no such thing as a client’s OVER-reaction.   Will there be some that “panic”, and want to sell, regardless of how much we prepared for this?  100%!  As Mike Tyson said, “Everybody has a plan until they get punched in the mouth”.  Make no mistake about it, a bear market can certainly be that “punch” to that client, and you cannot take offense if a client wants to sell. 

No matter how much I would like to, I cannot control the stock market and give a timeline of when it will come back.  My hope is that this virus will disappear as fast as it has it has appeared, and that my client’s accounts will go back up just as fast as they may have gone down.  When it comes to losses in the accounts, I do try to look at it as there is not a loss until we actually sell.   That means although balances may be down, in the long term, there is still opportunity for that perceived loss to become an actual gain. 

Will this be my last bear market?  Will the next one be the same as this one?  The answer to both is most like not.  However, if you feel your risk tolerance has changed, or you have not ever had a plan for this, then now is the time to start planning.  We may never wanted to be part of this “club”, but we have officially been inducted.