Market Volatility and Recession - Focus Your Time and Energy on Things that Move You Forward
I have been talking to my clients about expected recession since 2018 and, with a long-term approach in our minds, re-positioning their assets accordingly. The most recent* forecast published by S&P Global, confirms these expectations.
Some market observers point out** that “since the mid-February market peak, the Dow Industrials have closed more than 1,000 points lower on six trading days and rebounded at least 1,000 points four times. Adding to those moves, and potentially hastening them, are technical factors that have little to do with how investors feel about the outlook for companies, earnings and the economy.” The market started to be volatile and economy to slow down before coronavirus frenzy. COVID-19 (coronavirus) related fears are only adding to already existing market volatility.
According to Coronavirus COVID-19 Global Cases by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU), symptoms of the disease are more severe among older adults and people with underlying health conditions. More than 95% of people who get this virus survive. And though people of all ages have tested positive for the disease, the illness is much more dangerous and lethal among the elderly and those who already have a pre-existing condition.
World Health Organization director Tedros Adhanom Ghebreyesus said that the “stigma” surrounding coronavirus was “more dangerous” than the illness itself and advised people to “calm down.” I couldn’t agree more. Calm down and by all means reduce risks of getting and spreading the virus as suggested by health organizations and ordered by the state government.
The media is saturated with negativity and “doom and gloom” stories. Stay informed but refrain from excessively watching TV. Focus your time and energy on things that move you forward.
If you have a personal or family long-term financial plan – with the focus on your long-term objectives and your immediate needs, check your existing plan and see if any adjustments are needed. If you don’t have a personal or family long-term financial plan – create and implement one. Either way, schedule a consultation with a financial planner to review your existing plan or help you create a plan. This time when many fear possible recession, and Federal Reserve Board (Fed) is taking actions to prevent it, is not the time to panic but to be proactive and ask for help. A long-term approach to investing and financial planning takes in consideration market volatility and economic downturns. It involves risk management strategies that minimize negative effects of market and economic fluctuations.
Difficult times also remind us of others – the people that we love and the people who need our help. These times present great opportunities to express our love and gratitude to important people in our lives and, if we can, help and support those in need.
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* S&P Global, March 17, 2020
** Gunjan Banerji and Gregory Zuckerman/Why Are Markets So Volatile? It's Not Just the Coronavirus, March 16, 2020