March 2020 Newsletter

We are caught up in a nerve-wracking time.  But it is not the first, nor is it likely to be the last.  We feel that ‘a good investor’ is probably 50% emotionally controlled and 50% market knowledgeable.  And life could be worse.

March 2020 Newsletter

We are caught up in a nerve-wracking time. But it is not the first, nor is it likely to be the last. We feel that ‘a good investor’ is probably 50% emotionally controlled and 50% market knowledgeable. And life could be worse. Watching a tape from PBS on Country Music this weekend, we learned about a family of “Okies” who sold their belongings for approximately $37 during the Dust Bowl and started walking to California. After 3 days they had covered close to 200 miles and visited The Salvation Army for assistance. The charity took them down to the railroad and taught them how to ride the trains. The family rode trains to California and went to work picking cotton, but a son straightened up one day and announced, “No, we are going to sing and Rose will be our lead singer.” So “Maddox Brothers and Rose” was born. They were successful and known for their upbeat attitude and “everyone had a good time when they attended a Maddox show!” That family’s choices were limited, but they were willing to walk to California! The end to their story may be better than most, but it was their perseverance that mattered.

A market slide like this does not occur because the facts show a market out of whack and many good reasons to sell; this is panic through and through.  We forget the Bear Markets once a Bull Market is ongoing, and the facts show markets that go up live a cumulative longer life than those that go down.  I don’t even remember how many bear markets I have experienced as an investor, but they always end, and the longer bull markets make the bear markets tolerable and profitable. In 2009, the S&P 500 market was down 57% from a high in 2007. It moved rapidly downward near Thanksgiving of 2008 and I remember thinking about it frequently on Thanksgiving Day.  Many and, I think, most of you lived through that bear market with me also.  And then it all changed and the bull market was on! 

There are many questions: How much are the traders increasing the fear, what about the Federal Reserve, or the order to “social distance,” or the war in the oil market, or the students with their “extra vacation” from school, plus the robot machines and algorithms, the shopping frenzy and what else? Is the Federal Reserve now officially spent? And why do people wring their hands about the oil war? There is so much good in lower gas prices, isn’t there? Russia and Saudi Arabia have huge oil defense funds to continue the war and Russia is not likely to back down as suggested, because the US has been gaining share and Russia does not want that. We have the strategic petroleum reserve; does that help? Always more questions than answers, which is why Googins Advisors is determined to “keep it simple” and hold to the truths we have learned: don’t panic, continue to own good investments that were carefully chosen, and the market will eventually go back up!

I have read articles and warnings about the coronavirus. I have been surprised to learn facts that may not be well-known and they increased my sense of well-being. For instance, one of the doctors interviewed said, “Of those affected, 80% will just need rest while letting their own immune system work”. How about, “Home quarantine saves on public resources”. It sounded reasonable until I remembered the cost to corporations, and consequently the individuals employed by them, due to the quarantine: better count that! Also, the seasonal flu vaccine is 20 to 40% effective? And roughly 35,000 have been dying from the flu yearly and we have taken little notice. Rather scary stuff, but I know I can stay in my house and don’t need to sell anything or start walking to a warm climate!

Cheers! We are always happy to hear from you.

-Louise and Karl