There’s been a lot of happy talk lately over reopening the economy and seeing everything come back to normal. A lot of the talk has the economy in full swing by the end of the year. I don’t want to be a Debby Downer, but I think a lot of that talk misses the mark.

I’m also hearing a lot about the new economy and the great new opportunities in the market. For example, Zoom now reportedly has a market cap greater than all seven major airlines combined, and Netflix is now the most valuable entertainment company in the world. People ask all the time if they should be jumping on board.

Now I don’t have a crystal ball, but I do sometimes watch doctor shows on TV, and so I am not in any way qualified to make these types of pronouncements. However, no one else is either, so here goes. No. You should not be jumping onto these “opportunities,” at least in a major way.

First, these sky-high evaluations are ephemeral. Assuming at some point normal life–or a near approximation of it–will resume, airlines will be flying again, and Zoom will be back to its more reasonable valuation. There is, after all, nothing special about Zoom that other online meeting programs have, except for the name and ease of use. And now that Google has incorporated its Google Meet video conferencing into its calendar and email suites, I expect that will dominate and Zoom will become less a force.

The same is true for Netflix. Yes, its valuation is at an all-time high right now, but what happens when people don’t have 18 hours a day to watch TV any longer? I anticipate it, too, will adjust and more robust entertainment companies like Disney will resume their supremacy. But of course, I could be wrong; it wouldn’t be the first time. So, if I were to invest right now, it would probably be those companies that have taken a hit and are likely to be back, not the one soaring in the stratosphere.

The bottom line for me is that any types of play feels really risky to me right now. I think this is a time of retrenchment, a time to play defense as opposed to mounting an aggressive offense. We have no idea where this train is headed, other than it’s been off its tracks for some time now. Just today, as I am writing this, a new jobs report showed another 2.5 million people filing for unemployment this week bringing the eight-week total to nearly 40 million unemployed. These are Great Depression numbers.

And there is no sign the virus itself has abated. Yes, hospitals are less stressed, and the nightly death toll has been reduced, but that can be attributed to the very measures we are now abandoning. I understand this has become highly politicized, and while I very definitely have my own opinions, I try not to introduce those into this column, or into my client relationships. But I’m sorry. What have we seen that makes anyone believe that the opening of the country as it’s being done is going to do anything but cause spikes in the epidemic all over the country? We already see it happening in Georgia, Florida, Wisconsin, and other states. I believe more is coming, as much as I pray I am wrong.

What should you do? Well, I wouldn’t be paying down debt aggressively right now; it seems like a good time to emphasize liquidity. During the Depression, liquidity was the number-one problem. Interestingly enough, however, the single place from which most people had ready access to their money was…wait for it…their insurance policies! That’s right, while Wall Street was collapsing and banks all over the world were failing, insurance companies thrived. Pretty dramatically as it turned out.

According to the U.S. Department of Commerce, during the time of the Great Depression the insurance industry pumped more than $18 billion into the nation’s economy. If you adjust the dollars based on percentage of GDP, using the average GDP of the 10 years of the Great Depression, that equates to around $3.2 trillion in today’s dollars! At the same time, its assets and ability to pay increased from $18 billion in 1929 to $23.3 billion in 1934, or about $1 trillion in today’s dollars.

When you couple the unparalleled safety and resiliency of the insurance industry with the opportunities for growth without downside risk, it becomes almost a no-brainer. A fixed index annuity or indexed universal life insurance policy can provide a very effective way to recover from market losses and guarantee never to lose money to the market again. This is very important for a couple of reasons. First, every day you spend recovering from a market loss is a day you are not building wealth. And second, losses hurt more than gains help.

For example, if you have $100,000 in the market and it suffers a 50% decrease, you are left with $50,000, right? Many people then think if you have a 50% increase, you’d be fully recovered. However, this is not how the math works. If you have a 50% gain on top of $50,000, you only end up with $75,000. In order to fully recover from a 50% decline, you need a 100% gain.

Over the long haul this can have stark consequences. For example, take two accounts over five years. The first provides a 10% compounded annual return. By the end of five years, this account will have $161,051. Now look at an account that has a 10% average rate of return in the market: +20%, -40%, +50%, -30%, +50%. That account only grows to $113,140.

There is a saying in my industry that the reason you want to always stay invested is so you can be sure to pick up the biggest days in the market. The notion is without them you will never get the maximum amount possible. This past March, which had the seven biggest single-day gains in history, put that theory to rest. It also had the six biggest single day losses in history. How might you have fared if you hadn’t experienced either?

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Stephen Kelley is a recognized leader in retirement income planning. Located in Nashua, NH, he services Greater Boston and the New England areas. He is author of five books, including “Tell Me When You’re Going to Die,” which deals with the problem unknown lifespans create for retirement planning. It and his other books are available on Amazon.com. He can be heard every weekend on the “Free to Retire” radio show on WCAP and WFEA, and he conducts planning workshops at his New England Adult Learning Center, located in Nashua. Initial consultations are always free. You can reach Steve at 603-881-8811 or at www.FreeToRetireRadio.com.

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