I was in Las Vegas earlier this week on vacation, and as you can probably guess this trip was planned months ago. Aside from “traditional” entertainment offerings, Sin City is home to a number of high-profile music residencies, and shows such as Cirque du Soleil.
Given the location of the activities my wife and I had planned, we decided to stay at the Park MGM hotel. Incidentally, an NCAA basketball tournament was in progress at the T-Mobile Arena next door. We were on the fence about going on the trip given current events, but conditions have changed considerably from one day to the next.
On Thursday morning, I went down to the Starbucks in our hotel lobby, and while standing in line I overheard a conversation between a coach and a player from a competing team. It wasn’t until I spoke directly with a player from University of Colorado on the elevator ride back to my room that I realized it was the NCAA tournament that had been canceled, as of that morning.
The coach had said “Now that it’s been canceled, there’s really nothing for me to do here. I’m on a 1:30pm flight today, so if the airlines start canceling flights I’m golden.”
Immediately, the risk management “lightbulb” in my head lit up. This mental “lightbulb” isn’t the pleasing daylight-hue that many prefer, but the colder blue-tinted bulb that so many of us find less pleasing (albeit necessary).
The cancelation of the NCAA tournament followed action by the NBA, and in hindsight, nearly all events were put on ice during the next 24 hours or so. We hadn’t heard anything yet about cancelations of what we planned for the rest of the trip, though I did start to wonder, and we were well aware of the limited number of direct flights home to Boston. It was 1pm. There was a direct flight leaving at 9pm, and there were six seats remaining.
At this point, I reflected on what I’d done during the last year to prepare my financial advising clients for the next market downturn. The key point is this. When preparing for things to take a turn for the worse, the earlier you take action the more effective it can be.
And…If you wait until it’s obvious, you may be stuck in the herd of people that decide to take action all at once. Probably not an ideal outcome, and you won’t have a lot of control. That’s why you can’t wait until you’re directly told what to do.
It won’t feel like a win until later, and it might feel overly cautious at the time. That’s why the people that I work with have been well prepared for recent market events. Not because I had any insight on the likelihood of a viral outbreak, but because cracks in the longest economic expansion in US history have been starting to show for over a year.
In the end, we opted to take the Thursday red eye flight home to Boston, rather than completing our trip and returning on Sunday. It isn’t fun taking a red eye flight, let alone going to Costco that same morning…on this week of all weeks. Thankfully, we successfully avoided the flood of traffic now seen at airports nationwide, and MGM has since closed all of its hotels entirely in Las Vegas. Still, it wasn’t clear at the time. Some of our events were canceled, and some ultimately weren’t.
In a time of stress and uncertainty, implementing a plan to mitigate downside risk, capture the upside during a recovery, and knowing when to switch from defense to offense is one of the few constructive things you can control. Taking action will make you feel better.
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This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.