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Princeton, NJ 08540

© 2019 Novi Wealth Partners.

Before I started with Novi Wealth partners, my father told me it was the greatest profession and that I should consider it. The relationships and the work are very rewarding. He started in the financial services industry around 1994; our conversation took place in 1998. During his tenure in the profession, he had not seen any major market fluctuations. We then both endured along with our clients the tech bubble burst. A couple years later, Ryan Vogel joined us in 2006 and the three of us helped comfort and strategize for clients through the Great Recession that started in 2007 and bottomed in March 2009. We thought we’d seen the worst market in our lifetimes. 

Last week confirmed that we’re now traveling together through the third “once in a century” market event to take place during the first two decades of the 21st century. Ryan and I still love the profession, but I don’t think my father had this in mind when he was encouraging this as a profession for me. I am reflecting on this because most of the people reading this have also experienced the same events as we have. How you behave and react during these times of uncertainty is very important to your mental and financial well-being. 

On Monday, March 16th, the S&P 500 index tumbled 12%, breaking through the now-familiar stock exchange circuit breakers.  Tuesday, March 17th brought a ray of hope as the index gained 6%—which would, in any other market environment, be considered a remarkable one-day gain.  Wednesday, March 18th saw the S&P 500 drop 5.18%, followed by a small 0.47% gain, and then, on Friday, March 20th another 4.34% loss.  Just a month ago, the index was recording all-time highs; now we have experienced two of the worst market weeks since 2008. 

Monday, March 23rd didn’t exactly start this week on a positive note, but thankfully we received a major reprieve on Tuesday of this week. We can all see how damaging this is to someone’s wealth, but it is also important to remember the mental strain this puts on everyone along with the expectation to react to what is happening. It is good to remember, that most of this is just noise.

The reason that traders are running for the exits is, of course, the unpredictable course of the Covid-19 virus.  You don’t have to be told how our social distancing lockdown is disrupting economic activity. You need only to look around, this is almost certainly the first time anyone in the X, Y, Z or Baby Boom generations has seen empty grocery aisles, shuttered restaurants and theaters, and empty corporate offices as people in all walks of life are told to work from home. Viewing the real time movements of the disease in various dimensions on the Johns Hopkins and Medicine Coronavirus Resource Center website highlights the bottom line: the number of cases is still increasing dramatically, despite a near-lockdown of our society.

On a positive note (politics aside – not here to debate the tactics), the federal government has not been completely inactive during the crisis.  You already know that the Federal Reserve Board has dropped its rates to near zero in order to make it easier for banks to lend money to corporations.  More recently the Fed has pledged to reinstate its QE program, which means (for now) buying at least $500 billion of Treasury bonds and $200 billion of mortgage-backed securities—which can be seen as an attempt to drive down interest rates more broadly. Lastly, this morning, congress is putting together the final touches on a $2 trillion stimulus bill to keep the economy going.

Meanwhile, the Internal Revenue Service has scrambled to provide relief of its own, extending the date that people must file their tax returns from April 15th to July 15th.  The deadline for making contributions to an IRA, Roth IRA and Health Savings Account have also been extended to July 15, but nobody seems to know whether people filing for an extension will have to file six months from April 15th or July 15th. Some confusion remains for people who are required to make quarterly estimated payments. The estimated payments for the April 15th due date have been extended to July 15th, but the second quarter estimated payment is still, as of this this writing, due on June 15th. Which begs the question: are there any strategies for you to deal with situations like this?

First, I would recommend you be still and follow the guidance offered by the World Health Organization for your physical health and be mindful of your mental health as well. Once you have managed the most important aspects for your physiological needs, you can begin to look at the other basic needs. This is where the actions are unique to each person.

If you have a year’s worth of your expenses set aside in cash, then you have the means to simply live out the downturn without locking in the losses the market has already delivered or new ones that may arise when the second quarter GDP numbers come in negative and the economists declare a recession.  The markets recovered nicely and tested new highs after the last two downturns, and companies are almost certainly not 30% less valuable today than they were in January, no matter what the market valuations are trying to tell us. But most of us do not have a full year of cash set aside. For retired folks living off their portfolio, you should consider evaluating your expenses and dividing them into needs, wants, and wishes. Then try and limit spending to needs currently.

As you need money, a natural form of rebalancing will take place. Your cash needs will come from the bond side of your portfolio. If we are managing your money, you will likely have a good portion in high-quality shorter-term bond investments. These maintain value in times of stress and are highly liquid. This will allow your stock investments to recover. If you are still working, you may choose to adopt the mindset of “be greedy when everyone is fearful”. What we can say with a fair amount of certainty, your investments will be volatile in the short term, but up in the long term. 

Humans are resilient. And thankfully, the United States and many other countries believe in capitalism. We believe that we will wake up tomorrow thinking about how to make our lives and the lives of those around us better. This underlying thought process exemplifies the growth we typically experience in our economy and will experience once again. It will also likely lead to innovation. Please reflect on the two images provided below. If you are fearful that things will never recover, hopefully this will help alleviate that fear. Some of you have seen this before and have adopted the thought process. Both charts provide perspective on the investing experience for the S&P 500. They both demonstrate that we can expect volatility with our investments in the short term, but you can easily see in the first chart, you will have significantly more wealth if you can focus on the long term.

We have been here before. So please be kind to yourself and focus on the things you can control. Attempting to time when the market will drop, recover, and eventually pass the previous high is beyond our knowledge, unless of course you have crystal ball or a time machine. 

Someday, it will be a remarkable story to tell your children or grandchildren, who will marvel at how tough we were that we could move ahead with our lives in difficult circumstances.  Please accept our prayers, best wishes, and help if and when you need it.









We are not usually engaged in providing weekly market commentary, but I felt it prudent to bring attention to a philosophy that we discuss often. The stock and bond market prices are impacted by the flow of new information. As reports come out about changes in Coronavirus, stimulus packages, or anything else at this point the prices are reflected in your investments. With the amount of unknown and potential path for outcomes, the price swings have become consistently large. The one thing we can be certain, pricing for investments will be volatile in the short term and up in the long term. Take a look at last week:

Monday, March 9th : On news of a dramatic drop in oil prices around the world, and all-time record low yields on U.S. Treasuries, the New York Stock Exchange experienced such rapid share price declines at the opening bell that it triggered a “circuit breaker” that stopped the fall at around 7%. Temporarily: the index ended the day down 7.6% after some wild swings.

Tuesday, March 10th: Just as we’d settled in for unrelenting gloom, the S&P 500 index unexpectedly popped up 4.9%.

Wednesday, March 11th: The S&P 500 declined just under five percent on news that the World Health Organization had finally (and not unexpectedly, to anyone who was paying attention) declared Covid-19 a global pandemic.

Thursday, March 12th: Another circuit-breaker day, with the S&P 500 finishing down 9.51%, its worst one-day performance since the Black Monday event on October 19, 1987.

Friday, March 13th: Just as the markets seemed to be feeling a sense of despair, the S&P 500 roared up 9.3%, the biggest one-day jump since 2008.

Add it all up, and the market lost roughly 8% in a single week and decisively ended the bull market that began way back in March of 2009.

It is, of course, absurd to think that a diversified basket of (mostly) blue-chip stocks can be 7-10% more valuable one day than the next, which tells you quite clearly that emotions are driving these market movements. But all of us know that the many cancellations of events and gatherings, the reduced air travel, fewer restauranteurs and all the other impacts, big and small, of the current pandemic are slowly chipping away at economic growth, earnings and profits. What we do not and cannot know is whether the current prices in the stock market reflect the temporarily-reduced value of American companies—or not.

There is certainly reason to wonder about the jaw-dropping rise in stock prices on Friday. The nation was clearly relieved that the government was finally declaring a state of emergency, but behind the scenes, the Federal Reserve was also boosting stock prices by making massive cash injections—an estimated $1.5 trillion of repurchase agreements with the U.S. Treasury—into the banking system. There are credible (yet unconfirmed) rumors that the Fed will cut its funds rate down to 0% to further stimulate the economy and fuel the markets.

It would be nice if we could tell you what all this means for future market returns, or what new surprises the coming week will bring. Please be aware and caution of your emotions at this time. There will be many that will provide opaque guidance disguised as expertise. Our philosophy is to try not to time the market until we have located a functioning crystal ball. These are the kind of market conditions that test our patience and wear us down, but always, in the past, we would look back on big market swings from the perspective of new highs, and wonder what all fuss was about. Our hope is that someday soon, we will all be doing exactly that.











Novi Wealth Partners is monitoring the impact of the Coronavirus. Although, the impact of this disease will affect each of us differently, we would like to take this opportunity to discuss three areas where we are choosing to focus our attention: (1) your health and the health of Novi Wealth employees, (2) your personal finances, and (3) Novi Wealth preparedness.

Years ago, our firm tagged a line: “your greatest wealth is health.”  This motto still stands true today. We are not health experts, but we are familiar with some of the concerns with the spread of Covid-19. Please take time to monitor the Center for Disease Control (CDC) website for information and any action you should be taking to minimize any personal exposure.

At Novi Wealth Partners, we established a work from home policy to cover various natural dis

asters and having that in place ensures that employees have the necessary tools to work efficiently from anywhere, at any time. To protect the health of our employees, we will be implementing the work from home option as of Monday, March 16th. As a result, we will be utilizing the solutions in place to interact with our clients virtually. This has been beneficial as our clients relocate away from the Princeton area and is available to all clients, especially if you choose to practice “Social Distancing” to reduce your risk of exposure. Please be assured that will be available to you and we can do in-person meetings on an as needed basis.

Novi Wealth clients have a few distinct advantages over those that work with other investment management firms. We perform some activities that are not always a part of the investment conversation. We go through the financial planning process with almost every client. We begin every relationship with investment education and continuous updates as we find information that will add value. From this, we draft an investment policy for every client. These activities are designed to help you become a better investor and provide confidence during uncertain times. We do not know when the bottom of the current decline will be, but it is never a good idea to change your investment plan at the height of panic. For most clients, doing little or nothing is the best plan. For instance, leaving your bonds to meet cash needs as they arise. This is a natural form of rebalancing. For some, continuing the rebalancing strategy by selling bonds and buying stock can be prudent. This is determined on a client by client basis.

The partners at Novi Wealth are planners through and through. Not only do we make sure every client is in good standing, we are continually reviewing our own continuity plans, so we are prepared for uncertainty.  We are fiscally conservative with our company finances and after going through 2 recessions as a company, we are keenly aware of the financial needs for our operation. We have prepared our company as we would prepare you or your family.

We remain available for daily inquiries for your planning, investing, or anything else mentioned above. If you have any questions about your personal matters or our Business Continuity Plan, please feel free to give our office a call.