History Tells Us the Financial Sun Will Shine Again

April 23, 2020

Written by Mark Essenfeld, CFP®.

When I was quite young, the next-door neighbors were Mr. & Mrs. Hansen. I didn’t know their first names as kids addressed adults Mr. & Mrs. at that time. It seemed to me that Mr. & Mrs. Hansen were really old, probably about my age now, but perspective is one of life’s most amazing tricks. Being the age I was, I had a fair amount of time on my hands, you remember what that’s like, so I would visit Mr. & Mrs. Hansen occasionally to see what they were doing.

Mr. Hansen usually had something going on outside. He had a large garden that I liked to help him out with, and he always had a newly completed project to show me. Keeping rabbits out, tomatoes needing to be staked, and pulling unwanted weeds made the garden an ongoing project. On a really good day, he would take me out of the garden and into the garage to show me his workbench.

One day in his garage, late in the fall after the first snow, I noticed he had purchased a new lawnmower. I asked him, “Why did you buy a lawnmower now when there’s no more grass to cut?” He replied, “Well, no one wants one now, so I got a really good buy.”  I didn’t think much of it at the time, but as I got a little older, I noticed that Mr. Hansen did the same thing many other times—he bought his gardening tools in winter and Christmas decorations in January. The older I got the smarter Mr. Hansen’s buying strategy seemed to be.

One could think about buying stocks, or companies in exactly the same way if it could be determined when no one wants to buy them. But really, that’s much easier than it might first appear. You know what it feels like when you are uncomfortable about the stock market. You look at your statements and the accounts are worth less and less each month. You listen to the financial media and they tell you it’s the worst it’s been since the Great Depression. There are many reasons why we experience a low:  global political unrest, volatile oil prices, and as we are experiencing right now, a global pandemic.

Few people want to buy stocks in an environment like this, but Mr. Hansen would have been at the front of the line. The current environment of uncertainty, negativity, and depressed market values make it a great time to buy stocks “on sale”. We can all learn a lesson from Mr. Hansen. He knew when he bought his lawnmower that late fall day, summer would be here soon enough, the sun would shine bright again, and there would be plenty of grass to cut.

That’s my perspective on things. What’s yours?

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