A Real Test of Risk Tolerance
by Fred Snitzer
“For man also knows not his time: as the fishes that are taken in an evil net, and as the birds that are caught in the snare; so are the sons of men snared in an evil time, when it falls suddenly upon them.” Ecclesiastes
As we come to the half-way point of the year 2020, one of the more grueling and difficult years of recent memory, we naturally look back on the last six months with a mixture of “shock and awe” at what has transpired. The past four months in particular have tested all of us, personally, professionally, financially. Days have felt like weeks, and weeks like years. January seems like eons ago, like another world and another time. Although we should always try to keep things in perspective, and recognize that America is not experiencing anything like the Bubonic Plague or the Spanish Civil War, it’s still hard to believe what we are living through. For those of us who adhere to the glass-half-full philosophy, at least we can say this year is half over.
And we can be grateful that, after the truly frightening days of mid-March, the market recovered, helped by the massive stimulus from the federal government and the Federal Reserve, by the small signs of economic recovery, and by the declining rate of infection and death in northeastern states that were hardest hit at the beginning of the crisis. Bouncing back dramatically, the Dow Jones Industrial Average rose 7,000 points, and risk declined, with market volatility falling sharply from its highs in mid-March.