Are You Getting Queasy with These Markets? March 2020 Update

InvestmentsMarket Commentary
Written By Mike Mulcahy, CFA® CPWA® CTFA

I have been deep sea fishing several times. As the boat pulls into the deep, open ocean waters and begins methodically pounding against the swells, the volatility inevitably causes passengers to begin to feel queasy. While some seek solace in the fetal position below deck, I was taught that to make it through the trip and reduce the chance of seasickness, you had to keep your eyes on the horizon, embracing the swells and focusing your mind on the prize.

"Seasickness is the result of a complex physiological reaction to motion," says John Bradberry, MD, medical director for Carnival Cruise Lines. "It is a mismatch of information sent to the brain from the eyes, inner ear, and sensory nerves, such as in the feet."1

With the recent market swells, I imagine many of you are feeling some queasiness. Short-term volatility is a mismatch with longer-term objectives causing cognitive dissonance and driving us to leaning over the boat’s rails (that is, feeling “pukey!”).

To help you along this trip and toward the prize, here are some interesting numbers to keep in mind. These represent the approximate returns relative to the S&P 500’s total returns over different periods of time:

Since (and as of 3/23/20) Returns[2] My Thoughts
Year to Date -25.5% This is the worst trip ever!
1 Year -11.8% Yikes! I’m getting sick!
2 Years -4.5% Woof. This isn’t great.
3 Years 2.9% I’m feeling a little better.
5 Years 5.2% I think the sun is coming out.
10 Years 11.0% Getting my line ready!
20 Years 5.3% Bring on that school of tuna!
30 Years 9.7% I’m catching me a marlin!

Hopefully, this helps you feel a little better. It is important to always keep your investment horizon in perspective. I am hoping we do not have to update this again anytime soon. Happy fishing! 

[1] https://www.everydayhealth.com/digestive-health/easy-ways-to-keep-from-getting-seasick.aspx

[2] Annualized S&P 500 total returns through March 23, 2020. If you're feeling queasy, as always, please reach out to us. We are happy to serve you!

Mike Mulcahy, CFA® CPWA® CTFA

With the founding of Kings Path Partners, Mike brings a diverse set of professional and personal experiences into the wealth services business. His professional roles and community experiences give him a unique and real perspective into the needs of families, entrepreneurs, and business executives. Previous roles include president of a $6B investment management firm; management consultant with McKinsey & Company; VP of corporate finance & strategy with Compaq/HP; and managing director of an entrepreneurial web-based business. He is also an active venture investor with a focus on impact investing and social enterprises.

Mike earned an MBA from the Harvard Graduate School of Business and completed an Executive Program in Portfolio Management at the University of Chicago. He graduated summa cum laude with a Bachelor of Science in Economics with a minor in Chemistry from Texas A&M University. He holds designations as a Certified Private Wealth Adviser®, Chartered Financial Analyst®, and Certified Trust and Fiduciary Advisor (CTFA). He is a member of the Investments & Wealth Institute® and the CFA Society of Houston.

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