The coronavirus (COVID-19) is in full force. The pandemic has touched the entire world in one way or another. It does not appear that anyone can escape the threat of the virus or the economic impact at this point.
There are still many unknowns. It appears inevitable that we are in, or near, an economic contraction as well as significant changes to the way we will do business going forward.
Investors stuck at home and faced with 24/7 market news are likely to have a fair amount of anxiety about the condition of their investments and their retirement. While the news has stated many times this is “unprecedented,” I would challenge that every economic downturn has been called the same.
It is amazing that the stock market follows similar patterns of decline and recovery, regardless of the catalyst that caused the volatility in the first place. It is important to keep these macro cycles in mind and focus on the outcome and where you would want to be positioned then.
People often feel the need to do something when a market decline hits. In reality, staying the course and holding steady may be more difficult than the urge to do the wrong thing at the wrong time. Investors who work with advisers and have a financial plan to anchor to, will likely fare better than someone inclined to make a knee-jerk reaction. The plan provides the guardrails needed to keep you on track. Your adviser can tell you where you are within those guardrails from both a short- and long-term perspective. You don’t want to make long-term decisions with short-term information. This, in part, is what adds volatility to the markets, only to find you end up in the same place you started.
Stress and uncertainty are the main enemies besides the obvious, COVID-19. Stress can rob your immune system and uncertainty can lead to imagining extreme situations. I believe the fear of illness and death has added to the uncertainty and volatility beyond a normal correction or bear market.
In the coming weeks and months, there will likely be a lot of press about negative corporate earnings, rising unemployment and, yes, even recession. This is a good time to remind investors that the stock market is often forward looking. The significant declines in the last few weeks could be the bell weather for expected bad economic news.
Now let’s look at all the positives that have occurred already. First the Federal Reserve was quick to cut interest rates aggressively. Next, we received the Family First Coronavirus Response Act. This provides aid, sick leave and emergency funds to individuals and tax credits to employers. This Act also includes a 90-day extension on tax return filings and payments.
Then Congress passed a $2.2 trillion CARES Act stimulus package to shore up unemployment and provide a host of benefits. This includes cash to households under a certain income limit and relief for several industries hardest hit. These massive amounts of capital injections into the economy are designed to fill the hole created by the economic effects of COVID-19.
Now let’s look at how businesses and communities have stepped up to help. Everything from apparel companies making protective gear, to Ford and GM making ventilators, and hotels and Navy ships turned into hospitals. Neighbors are bringing food, sports teams and musicians are raising money, and technology is providing remote offices for millions.
Yes, these are interesting times: When pollution has all but disappeared; major insurance carriers have waived co-pays; and drug companies are working nonstop for a nonprofit cure.
Hopefully we don’t let this opportunity escape without finding ways to improve our world. And when we do, you probably won’t need to worry about your portfolio.
Source: Mariner Wealth Advisors commentary and newsletter.
Patricia Kummer has been a Certified Financial Planner and a fiduciary for over 30 years and is Managing Director for Mariner, LLC d/b/a Mariner Wealth Advisors, an SEC Registered Investment Adviser. Please visit www.marinerwealthadvisors.com for more information or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Securities offered through MSEC, LLC, Member FINRA & SIPC, 5700 W. 112th Suite 500, Overland Park, KS 66211.