You’ve seen it all over the headlines and social media. It’s been the chief subject among your friends and peers. Coronavirus. Beyond panicked shoppers, closed restaurants, and cancelled public events, what are the proper expectations for your money? Those who have been reading my Keeping it “Reel” pieces know that I publish these during times of uncertainty, times when clients should be hearing from their advisors. It hasn’t been often lately, but it is necessary now. While we live in a society that is jam packed with content for us to feast on, my intention is that folks read a condensed version of what I feel like is a rational take on things.
Back in January, many client conversations were centered around lofty market valuations, checking risk appetites, and having some cash on the sidelines for a market pullback. My thesis was that we wouldn’t know what the market moving event would be, or when it would be, but we certainly got it now in an especially bigger way especially because of the valuations we started at. For those that do have some dry powder on the sidelines, this bear market provides long term opportunities for investors, just like every other black swan event or economic recession in past history. And while we are still relatively early on in this challenge, we should all take a collective deep breath and realize that this will be in our past with time. If the market reaction has you panicked, now is also a fantastic case study to evaluate your appetite for market risk. But investors must not succumb to panic selling. There are decades of data supporting this notion.
So where do we go from here? I could write many scenarios to answer that. The simple answer is that we do not know exactly how or when things will play out and become clearer. That is one of the main reasons for the markets acting the way they are – uncertainty. What we do know is that countries like China (where this originated) and South Korea seem to be at their peak, and economic data is improving in that region.
And what can we do at this point in time? We can follow CDC and government instructions, which are meant to slow the spread of the virus, not panic us. We can practice the best hygiene we’ve ever practiced (see CDC suggestions), and we can remain patient because, this too, shall pass. I will continue to monitor the progress of this event and issue updates as needed. Please feel free to reach out with any questions whatsoever.