By ROBIN POWELL
For me, every day in lockdown has begun the same way. I take a vitamin D tablet and wash it down with a lemon and ginger shot.
I’m no expert in medicine or nutrition. But there’s a fair amount of evidence that my little ritual may afford at least some protection against coronavirus.
Whether it does or not, I can’t say. But more important for me are the mental and emotional benefits. The sense of control amid all the uncertainty.
Oh, for an investing equivalent
How wonderful it would be if investors could do something similar at times like these? If there were a supplement we could take. A vaccine against fear of the unknown. A drug to settle our minds.
Just ten weeks ago it all seemed so grim. Global stock markets appeared to be in freefall. The economy, we were warned, could take a decade or more to recover. Tens of millions of people around the world would have to put retirement on hold.
But yesterday the S&P 500 closed higher than it started the year. The index has surged 45% since its nadir on 23rd March.
S&P 500 index year to date
A buying opportunity gone begging
Shortly before that low point I suggested to my student son that it might be a good time to start investing in a low-cost global index fund. He promptly opened an account. I warned him not to check, and thankfully he didn’t for the first day or two. He’s now giving me regular updates on how fast his money is growing.
To be honest, I had no idea then how close to the bottom we were. I’m as surprised as anyone at how markets have rebounded. But short-term market movements, as we’ve said time and again, are totally unpredictable. To quote fellow blogger Michael Batnick, “if 2020 hasn’t convinced you that predicting the future is impossible, I’m afraid nothing ever will.”
It’s certainly been an extraordinary period for market watchers. It’s sometimes said that stocks go down in an elevator and come back up via the stairs. This time they didn’t even get out at the bottom. They just pressed the button and whizzed back up, almost as quickly, to where they were.
Active managers have been trounced
The fund industry kept telling us, as it always does at times like these, that now was the time for active management. It wasn’t. From the UK to Australia and from Canada to continental Europe, active managers were trounced by the index in the first quarter. The results for Q2 look set to be even more humiliating.
Yesterday, on CNBC, longtime hedge fund manager Stanley Druckenmiller was asked to explain why he has lagged the index by a staggering 37% since stock prices bottomed. The market, he admitted, had “humbled” him. You can say that again.
More twists and turns to come
Who knows where markets are heading next? I don’t. Warren Buffett doesn’t. Nobody does. And that includes your financial adviser, and the money editor of your Sunday newspaper.
The only thing we can say with any certainty is that there will be many more unexpected twists and turns in the coming months.
If the market falls we saw in March freaked you out, you should speak to your adviser about reducing your risk exposure. If you don’t have an adviser, find one — an evidence-based adviser who is totally agnostic about the direction the markets will take.
Stay safe. Self-isolate from pundits and salespeople. Focus on what you can control, and forget the rest.
Oh, and keep taking the shots. I suspect you’ll be needing them for quite a while yet.
Can Vitamin D protect you from coronavirus?
And what about lemon and ginger shots?
© The Evidence-Based Investor MMXX
