Clients have heard me say for years “Ignore what they say, watch what they do.”

The last 25 days has seen me tell clients repeatedly that selling stocks now may- or may not be the right decision, but locating the bottom of the market will be a function of chance.

If they choose to sell they must (1) articulate the conditions under which they would re-enter the market; and (2) give me their own prediction of when they believe things will be ‘normal’ again. It’s interesting in that thus far no one has been willing to answer #1, and in every case the answer to #2 has been “five years or less.”  As you might have surmised, very few are selling stocks.

I am not. In my liquid portfolio (mostly tax-favored retirement accounts) my allocation pre-COVID19 was about 90% stocks and 10% bonds and cash. This reflects that I am still ~20 years away from tapping these funds to pay for my and my wife’s retirement. I contribute to my company’s 401k plan every payday (monthly) and this March those funds will go into stocks just like they have every payday for the past 15 years at Aegis.

I’ve already rebalanced somewhat modestly from the bonds to the stocks twice (at roughly the -15% and -25% levels). The S&P 500 has lost 35.4% from its peak value, and other asset classes like small company stocks (Russell 2000 index is down 43.7% peak to bottom) have lost considerably more. I didn’t do it because I was trying to time the bottom (which would make me 0-2 in that regard thus far) but because I believe in an eventual recovery and when it happens I want to own more shares.

In my working life I’ve seen two top-to-bottom moves of the S&P in excess of 50% (2000-02, later 2007-09). In both instances the shakeout took nearly two years. If indeed all unhappy families are unhappy in their own way, then all market crashes are unique.

But like happy families, I still believe all recoveries are the same: no one knows when they will begin but we will all see it in the rearview mirror months later. Then the hindsight bias will kick in (“I should have bought at 45% discount!!!”) and the self-loathing will kick in again just in the opposite direction.

I choose not to play that game. At Aegis we’re focused on our clients and our employees: we’re going to need all of them both to get through the downturn and then the recovery. They are an extraordinary collection of people I’m proud to call my colleagues and friends.

No one should go through this alone. If you’re ready to talk to someone about your plan and where you’re going, we’re ready to listen.