COVID-19 Market Update
The Corona Virus has undoubtedly caused unforeseen disruptions in our lives, and for those personally impacted by the virus, it has created tremendous angst. Our job as wealth managers though is to navigate how, if at all, this impacts our client’s long-term financial plans by relying on a time-tested and proven process to keep our clients on track.
While it is extremely uncomfortable to watch portfolio values fluctuate on such large-scale levels, the most important thing to remember is that at Surevest, your plan was created with these types of shocks in mind.
Our process and discipline are what allow us to keep a level head and execute during these times of volatility.
Sticking to a process worked through Black Monday, the dot-com crash, September 11th, Bird Flu, Ebola, SARS, and the Great Recession; this time will be no different. The recovery will take time though. We expect there will be short-term dislocations, corporate earnings will be depressed for the next few quarters and certain parts of the economy will need assistance to rebound. Fear and greed are two emotions that have tremendous control over market prices in the short-run, but in the long-run, logic always rules. We all know that market corrections are a part of the process. Each time we feel that it is “different this time”, but the fact of the matter is, it never turns out that way; markets ALWAYS recover.
For our clients who need income in the next 4 years and beyond, those assets were never allocated to equities in the first place. Those dollars have been isolated in safe assets that have not been impacted at all by these movements. In most cases, they have increased in value during this decline. This allows our clients to weather the storm in these down turns as their income needs, which support their lifestyle, are not impacted.
For clients who will not count on their investment portfolio to fund income needs for several years, these dislocations, while unnerving, have had zero impact on your future. For those who have not capitulated, abandoned their long-term plan and made decisions based on fear rather than process, we have reviewed either deploying new capital into their portfolios and/or have made shifts in their risk profile to potentially benefit from declining prices.
We are confident by the end of this year that we will look back at this from a financial perspective no differently than we have for all previous crises on the above chart. Once the dust settles, we will hear the ‘could have/should have’ or ‘shouldn’t have/wish I didn’t’ statements. To avert from making these statements, we recommend three actions you can take now, that have proven time and again as prudent:
- Review your plan with your financial advisor
Assure that you have your next 4-6 years of income estimates in safe assets away from the volatility.
- Be opportunistic
If this is not money you need for the next 5 years, look to be opportunistic. When things rebound, you benefit from going against the herd.
- Do nothing
For many, doing nothing is the worst thing they can do. This is because they never had a plan in the first place. By not having a plan, you are extremely vulnerable in these situations. However, for those with a plan, similar to our clients, they have already acted in the design and ongoing management of their portfolio to address these situations. In this case, simply sticking to the plan and avoiding watching market prices on a daily basis may be the best thing to do.
What we are doing to protect our employees at Surevest.
Fortunately, our employees are based in areas that have experienced minimal impact from the virus. However, we remain grateful to have made significant investments in technology that allows many of our employees the ability to work remotely and the capability of performing meetings virtually through video and screen sharing. These investments afford us the resources that allow us to communicate, without disruptions to our serving our client’s needs, all around the country.
On a larger scale, we believe many other companies have been shifting to a dispersed work force with employees around the country interconnected by a single technology hub. This will significantly mitigate the impact on the economy and to their employees during this crisis. As a society, had we not made these great technological advancements, this would have caused a much greater dislocation for longer. This is a testament to the underlying strength of our economy, innovative force of our people, companies, and reinforces that we are not a country to go short. We believe this market and our country will rebound stronger than ever, and this time will be no different than the resilience we have shown time and time again.
Please reach out to your advisor with any questions and to review your plan.
We appreciate the confidence you place daily in our people and process to help navigate your financial future.