In April of 2020, with the stock market down over 30% and COVID-19 raging throughout the U.S. and all around the world…we told you that although we had just fallen off an economic cliff, that a soft landing which would be aided by government stimulus, a developing vaccine… and what had been a strong economy… was on the horizon. This led us to believe we could see the other side and had the economic strength to make the climb.
What transpired over the next few months was both tragic and tremendous. As the death toll continued to soar… with our economy and our lives pretty much shut down… the U.S. government pumped more than 4 times the stimulus it spent during the Great Financial Crisis in 2008-2009 into the economy. Pharmaceutical and biotech companies like Pfizer, Moderna and Johnson & Johnson worked tirelessly day and night to put their vaccine candidates through clinical trials. Many companies stuffed 10 years’ worth of innovation into just a few months so they could function remotely.
We are now reaching the other side…so what is next? Did we borrow too much money to support our businesses, citizens, and non-profits while everyone was masked up and hunkered down? Will enough of those who are still not vaccinated change their minds so we can reach herd immunity?
If we think of our 2020/2021 economy as a hiker, she fell off the cliff and began the climb up the other side in much better shape than the 2008-2009 hiker…. and had a much shorter hike out of the abyss. Especially when considering the massive low interest rate stimulus fuel stuffed in her backpack and an incredibly effective vaccine stuck in her arm. Eventually, the stimulus will put too much weight on her shoulders and slow her down to the point where she falls, but for now she is setting a torrid pace… with expensive, state of the art gear and…and she is motivated to make up for lost time.
The trail will undoubtedly get rockier, more slippery and steep. Therefore it is critical that she doesn’t abandon her safety gear (bonds, rebalancing, value stocks, dividends and diversification) or get tempted to go down unmarked trails littered with the skeletons of impatient hikers in search of a shortcut (GameStop, dogecoin, currency and precious metals bets).
The trail over the last 18 months has had a decade’s worth of twists, turns, peaks and valleys; and we have called on all 170 years of our collective “hiking” experience to commit to our path, but be flexible enough to change course a bit when conditions have warranted.
The most important hikers following us on our journey have been you…and your trust and confidence in us to get you and your family’s or institution’s wealth to the other side is something for which we will be forever grateful. We did not have one client panic and sell in the freefall of Spring 2020!
We are really looking forward to two important dates in September. If our office remodeling goes according to schedule, we will be moving back in about September 1…just in time to celebrate Golden Pond’s 25th birthday on September 6th. A big celebration that includes all of you is being planned for Summer 2022..more details to follow shortly.
On behalf of the hiking crew here at Golden Pond, thank you for giving us the opportunity to be of service…and we look forward to seeing many of you in the office soon.
Brian Bernatchez, CFP®