Financial Planning Fridays #186: Six Years After the COVID Market Low: The Power of Staying Invested

Hi friends, today I want to talk about the six-year anniversary of one of the most scary moments many investors have experienced in recent history: the market low during the COVID-19 pandemic on March 23rd, 2020. That day is especially memorable for me for another reason as well. Our son Jake turned six that day, and our daughter Emma was four. At that point, we hadn't seen anyone outside of our immediate family for nearly a month. The world felt completely lost. No one knew how severe the COVID crisis would become or how long it might last. And at the same time, the stock market had just experienced its fastest decline in history, falling almost 34% in a single month, with no clear end in sight.

But our clients had something incredibly important in place before the crisis began: a thoughtful financial plan and a disciplined investment strategy. So instead of reacting emotionally, we went into action. We rebalanced portfolios and purchased stocks at some of the lowest prices we had seen in nearly a decade, confident that even in the middle of enormous uncertainty, the world would eventually recover and markets would begin to move higher again.

Many investors unfortunately made the opposite decision. In fact, more shares of S&P 500 companies were sold in March of 2020 than any other month in history. At the time, the world was still locked down, the virus was spreading, and there was no clear path forward. And yet, something remarkable happened. The market bottomed the very next day and began a powerful recovery. An investment in the S&P 500 made on March 23rd, 2020 is now up more than 235%.

So, what can we learn from this experience? First, declines like this will happen again. We just don't know when. It could begin tomorrow or 10 years from now. But when it does, the most important thing is having a plan in place before the decline happens. At Presilium, we remain committed to our clients' long-term investment strategies, regardless of what the headlines say or what crisis caused the downturn. History has shown again and again that markets eventually recover and move higher over time. And when you zoom out and look at the long-term picture, what once felt like a huge market event often becomes just a relatively small blip on the chart, and sometimes an incredible opportunity for prepared investors. Thank you for watching, and I look forward to talking with you next Friday morning.