“This too shall Pass”. I remember reading this quote during the dark days of my divorce and it often comes to mind during troubling times. It is a Persian adage that has been translated throughout the ages to reflect the transitory nature of most things (problems, pandemics, market selloffs, political discourse, famine and strife).
Can anyone tell us what happened to SARS? Seriously….what happened to SARS? There was no vaccine. There was no cure. Where did it go? The hazmat suits were on the front page of every newspaper around the planet. Well now we are with a new Pandemic called the Corona virus (COVID-19). Only it turns out that it’s not that new and most of us will get it in some form over our lifetime. This too shall pass.
Media hype, crowd mentality and fear mongering has led to a selloff in global stock markets. People around the world have ravaged stores shelves of canned goods, bottled water and toilet paper. Costco has been cleaned out of tissues, wipes and the like. My partner, Trish, has been there three times trying to pick some up. Surely this isn’t rational behaviour. This too shall pass.
The market selloff was one of the steepest and quickest in market history. Far quicker than I recall when I was sitting at a trading desk in 2008. Computers, algorithms and servers with automated trading code sitting at the stock market (FYI this is called co-location) now account for a significant (60% to 80%) off all trading activity on any given day. Market makers who used to step in with bids and support markets during selloffs have been relegated to the bleachers. Market movements have become instantaneous with corresponding moves in volatility (market gyrations). Volatility went on a wild ride on Monday March 3rd reaching levels not seen since 2008. Account values are down and the psychological discomfort is real. This too shall pass.
How can we compete with all these machines that seem determined to rock the markets. We can beat them through diversification, intelligent asset allocation and most importantly time. We know it’s hard in times like this not to be nervous, anxious or scared. The physiological manifestations are real….but…. This too shall pass.