Video Library

Scroll through the Perspective Financial Services Video Library to watch original, brief videos on a wide range of personal financial planning and investing topics. (more…)

US Economy Showing Resiliency

Amid a period of scary viruses and social unrest, it’s time again for a reminder that the wise investor maintains a written long-term investment plan, then holds on tight and stays invested when markets are volatile. Despite everything, U.S. markets and the economy are showing remarkable hardiness. How is the US economy showing resiliency? Read on.

We experienced a nerve-wracking stock market correction in March 2020, with U.S. stocks declining about 33 percent. Since then, markets have come back strong. Stocks rose around 30 percent from mid-March to mid-June 2020, as measured by the S&P 500 large company index. Who could have guessed?

Then May brought surprisingly strong employment numbers as the economy gradually re-opened. The number of unemployed fell by 2.1 million, according to the Bureau of Labor Statistics. (Note: the bureau acknowledged misclassification of workers on temporary layoff in its reporting since March. While May’s unemployment rate remains high at 16.4 percent, it still represents a dramatic drop from April.)

It’s wise advice to remain calm and steady in challenging times. Doing so helps us endure and navigate the unpredictable. Investors, too, are often rewarded for staying calm in volatile markets.

“Emotions can have lasting consequences, and this is particularly true when you try to time the markets,” says Josh Hile, a Seattle-based investment analyst.

Perspective Financial clients have a clear, written, long-term investment plan, executed using broad diversification and reputable mutual funds. Rough times tend to be easier to get through, as a result.

Speaking of the U.S. economy – built on grit and a never-give-up spirit – allow me to share a book recommendation. Graham Moore’s The Last Days of Night is a historical novel about the invention of the light bulb and efficient electricity transmission. Featured in the story is the sometimes-nasty rivalry between Thomas Edison, George Westinghouse and Nikola Tesla. It’s an engaging read and wonderful break from every-day stress.

As Moore describes his work, “I love the notion that I could write something that two people could share. That’s the goal.”

By |2020-06-15T16:15:06-07:00June 22nd, 2020|Books, Current Affairs, Investing|

Pandemics and Economic Cycles

It’s reasonable to worry about the outbreak of a previously unknown virus, and taking safety precautions is prudent. Yet, fear of the unknown should not drive our decision-making or cause us to shut down our lives. We may not be able to control travel bans, event cancellations and school closures. We can control our emotions and how we respond to challenges. The past is not predictive of the future, but it does offer valuable perspective. Consider the following information about previous pandemics and economic cycles.

  • When most travel was by boat, infectious diseases typically spread around the world in six to nine months. Everything seems to happen faster today. With global air travel, a virus can become a pandemic within three months. That has been the case with Coronavirus, which first emerged in China in November 2019. The typical duration of a pandemic is 12 to 18 months; it can come in waves of about three to 12 months apart, according to the CDC.
  • Schwab recently conducted an analysis of 13 global pandemics in the past 50 years. The data shows that once the number of newly identified cases starts to decline, economic activity and the stock market tend to quickly rebound.
  • Data compiled by Capital Group shows that past market corrections and bear markets haven’t lasted forever. The Standard & Poor’s 500 Composite Index has typically dipped at least 10 percent about once a year, and 20 percent or more about every six years, according to data from 1950 to 2019. Each circumstance has been followed by a recovery and a new market high.

Recessions are part of the natural economy. Similar to the ebb and flow of the tide, expansions and contractions in the financial system are expected. At Perspective, we factor that into the long-term investment plans of our clients. While stocks rise and fall in the short term, they tend to reward investors over longer periods of time. Keeping your view on the long-term horizon will help you maintain a positive outlook.

Keeping all this in mind, we do recognize that each person’s situation is unique. There is not one right or wrong course of action. If you’re feeling anxious about your financial situation or simply want to know your options, please talk with your Perspective advisor. Being informed and talking about your concerns can go a long way in relieving stress. We are always available to help.

As we all ride out this latest challenge, focus your time and energy on things you can control. Do your best to continue the activities you enjoy. Spend time outdoors, visit with a friend, whatever makes you feel happy.

By |2020-03-18T10:35:13-07:00March 18th, 2020|Current Affairs, Investing|

A Broader Perspective on Coronavirus

It’s reasonable to be concerned when a previously-unknown virus reaches pandemic proportions. Our questions go beyond, what happens if I get sick? We want to know how this might impact our daily lives? Our finances? Our future? With current research and historical data from trusted sources, we offer a broader perspective on Coronavirus that should help put your mind at ease. Click below to watch our latest video (approximately 6 minutes), or scroll down to read the full transcript. For more perspective on the cyclical nature of the financial markets, read our 2011 article, “The Peril of Panic for Investors.”


A Broader Perspective on Coronavirus: Full Video Transcript

The world learned of the previously unknown Coronavirus in December 2019, when China announced an outbreak had occurred in Wuhan city several weeks before. The virus had already spread to neighboring countries, and by mid-March 2020, more than 110,000 cases of COVID-19 had been reported in 100 countries, according to the World Health Organization.

While the situation is challenging, the WHO also stressed that such numbers don’t tell the whole story. Of all the cases of COVID-19 worldwide, 93 percent are in four countries: China accounts for about 81,000 cases; and Iran, Japan and Italy have roughly 7,000 cases each.

“We are not at the mercy of this virus,” WHO Director-General Tedros Adhanom Ghebreyesus said in a press statement March 9. “With decisive, early action, we can slow down the virus and prevent infections.”

It’s reasonable to fear an outbreak of a previously unknown virus, and taking safety precautions is prudent. (At the end of this video, we’ll share some tips from the U.S. Center for Disease Control on how to protect yourself and others from the spread of germs.)

That being said, it’s never wise to panic. Life happens. There will always be things we cannot predict and cannot control. But fear should not drive our decision-making or cause us to shut down our lives. Because doing so often causes more serious consequences than the original threat.

The COVID-19 outbreak began to rattle the financial markets in January. By February, businesses were canceling annual conferences, local governments were banning large public events, and some municipalities were even closing schools. These cancellations and restrictions were made in response to public fear, rather than to WHO or CDC recommendations. Regardless of the reasons, such actions cause immediate strain on local communities and create far-reaching ripple effects to national and global economies.

Dramatic volatility in the global investment markets has been one effect. Large swings in the stock market make people nervous and the knee-jerk reaction is to pull money out of the market. In most cases, individual investors who allow their emotions to dictate their investment decisions will suffer from poor long-term results. This occurred in the wake of the 2008 financial crisis. Investors pulled their money out of the stock market as a reaction to the sharp decline, only to subsequently miss out on recouping losses in the dramatic recovery that followed.

While the past is not predictive of the future, it does offer valuable perspective. Charles Schwab recently conducted an analysis of 13 global pandemics over the past 50 years. Their data shows that once the number of newly identified cases starts to decline, economic activity and the stock market tend to quickly rebound. A key reason, according to Schwab analysts, is that global health organizations are prepared for outbreaks and are effective when mobilized. Combining these efforts with widespread public awareness and adoption of effective safety measures eventually limits the spread of the virus and its economic impact.

Leadership Consultant Maureen Monte recently pointed out that emotions are energy, and the crisis the world faces today is more about energy-management than COVID-19. “It’s important to remain calm, positive and realistic in the face of a relatively unknown and uncertain threat,” she said.

How, exactly, does one remain calm, positive and realistic?

  • Think about how you’ve responded to troubling events and worries in the past. Write it out. Was the outcome of your action positive or negative? What might you learn from that experience to help you today?
  • Use logic. Flu outbreaks hit us every year. It’s a part of life we’ve all come to accept. There are also natural disasters, political scandals and tragic accidents. Most of these are outside of your control. Yet, how you respond is entirely within your control.
  • Turn off the news. With the current 24/7 onslaught of news, it’s critical that we each manage how much time we invest in following the commentary. There’s a difference between being informed and being obsessed. Use your energy productively. When you want an update, go straight to the source at the CDC and WHO websites.
  • Focus on the good things in your life. Do what you enjoy. Spend time outdoors, have coffee with a friend, whatever makes you feel happy.
  • If you’re feeling anxious about your financial situation, call or meet with your advisor and talk about it. Expressing your concerns can go a long way in relieving your stress.
  • Keep your eye on the long-term horizon. Patient investors with a solid investment plan that balances risk and reward with a diversified portfolio tend to be rewarded in the long-term by staying the course.

How to Protect Yourself and Others from Germs

Help prevent the spread of COVID-19, flu and other diseases with these simple recommendations from the CDC:

  • Avoid close contact with people who are sick. If you’re not feeling well, stay home.
  • Wash your hands often to help protect you from germs. If soap and water are not available, use an alcohol-based hand rub.
  • Cover your mouth and nose with a tissue when coughing or sneezing. If you don’t have a tissue, cough or sneeze into your sleeve.
  • Avoid touching your face. Germs are often spread when you touch something that is contaminated and then touch your eyes, nose, or mouth.
  • Practice good health habits. Clean and disinfect frequently-touched surfaces. Get plenty of sleep, be physically active, manage your stress, drink plenty of fluids, and eat nutritious food.
  • Take extra precautions for elderly people, young children and those with severe chronic conditions, who are at higher risk of developing serious complications when ill.
By |2020-03-11T12:11:48-07:00March 11th, 2020|Current Affairs, Investing|

Election Year Market Volatility

As we approach year-end, it is natural to consider what is on the horizon for 2020. One of the events taking place next year is the presidential election. Based on historical data, we know to expect some election year market volatility. This may lead you to ask, “How will the coming election impact my investments?”

Research assembled by Dimensional Fund Advisors (DFA) shows it’s hard to anticipate how markets will react based upon an election outcome. Nevertheless, patient long-term investors have benefited from staying the course regardless of which political party has governed the White House. (See chart below.)

“Investing during an election year can be tough on your nerves, but it’s mostly noise and the markets carry on,” says veteran Capital Group Portfolio Manager Greg Johnson. “Long‑term equity returns are determined by the value of individual companies over time. So, it’s better to stay invested than sit on the sidelines.”

Stay the Course

Uncertainty about relations with China, talk of potential recession, and the coming presidential election will make for an interesting 2020. Don’t let the inevitable corrections that take place in the market – over which we have no control – unnerve you. Being patient and staying invested through market ups and downs is key to meeting your long-term financial planning goals. Do your best to tune out the noise and focus on the things in life you can control.

Election Year Volatility

By |2019-12-09T15:11:10-07:00January 13th, 2020|Current Affairs, Investing|