Situation Desk: March 10, 2020
Situation Desk: March 10, 2020

Situation Desk: March 10, 2020

 

By:

William M. Giffin
William M. Giffin
Chief Executive Officer
Executive Board Member

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Situation Desk: March 10, 2020

From the Situation Desk – The Ongoing Impact of the Coronavirus

The Ongoing Impact of the Coronavirus

The coronavirus and its seemingly unending impact continues to rattle the markets and shake up our world. Throw some oil on the fire thanks to Russia and Saudi Arabia, and you get the volatility we saw on Monday. Seth Godin, a popular business writer, recently wrote that in today’s connected world we often experience the effect of an unfolding tragedy twice: “Once, when we’re filled with fear of the unknown (with various entities fanning panic) and again when it actually arrives.”

For those who have lost a loved one or fallen ill with the virus, the coronavirus is not a threat; it’s a life-altering, tragic reality. For the rest of us, the fear of the unknown shapes our conversations and our behavior. Our instant access to news and the viral nature of media itself can light up our anxiety, which tends to lurk just beneath the surface of our lives as well as the market.

If there is one thing the history of the market can teach us it is that in the long term, the market goes up. But not straight up. In recent memory – with the SARS virus in 2003, Ebola in 2013, and Zika in 2016 – the markets trended higher six months or a year following those major outbreaks.

But today, six months feels like forever—we are locked in this moment.

Recent Market Volatility

The Dow was up two days and down three days last week, with a combined move of 4,479 points. However, had you looked Monday morning and then not again until Friday afternoon, you would have seen a move of just 283 points lower for the week. We have now begun this week in an even grander way with a 2,000 point move down Monday and a rebound on Tuesday as investors speculate on the timing and size of stimulus promised by President Donald Trump to combat the coronavirus’s economic impact.

This volatility is not likely to subside anytime soon. We should expect the disquieting ups and downs of the markets until the contagion and its economic effects are clearer. The precise timetable and ultimate number of infections is still too soon to call. The coronavirus has provided us yet another good reminder that market corrections will occur, but that should not cause investors to deviate from their long-term strategic plan. It is in times like these that we are seeing the benefits of holding a diversified portfolio made up of equities and fixed income, as those portfolios have not gone for the same ride as the headlines would indicate.

These days of uncertainty gives investors a chance to reevaluate their tolerance for risk and rethink their objectives. Sometimes the invitation to reflect on the bigger picture can fall on deaf ears when the market is screaming to new highs; the financial plan takes a backseat to greed and excitement.

Disciplined Investing

One perk of longevity in the investment management business is perspective.

Since our founding in 1993, we’ve made investment strategy the bedrock of our business. The foundation of our work is that of our investment committee and its disciplined approach to weighing fundamental economic indicators, which we discussed in our last market commentary. Our investment committee met last week and then again today, and currently we do not recommend any changes to our portfolios. We are in a dynamic real-time conversation about the news of each day and we will continue to analyze incoming information to determine if any changes to our portfolios are justified. While the markets are rattled, our investment approach for each of our clients is not. The coronavirus cannot spread to our strategy, which considers each of our clients’ goals and timelines.

There is no clear end to the coronavirus and its impact, though we know from experience that in time, this too shall pass. But for now, we promise to continue to communicate our views as we make our way through the crisis. Please call with any questions or concerns that you have. This is critically important during stretches like this and we welcome the calls.

We will continue to serve you with our best and most experienced investment minds. If you have any concerns, again, please reach out to your advisor.

 
 

Tags:  Consumer Confidence, Coronavirus, Corporate Earnings, Disciplined Investing, Economic Outlook, Federal Reserve, Global Supply Chain, Letter from the CEO, March 2020, Market Performance , Market Update, TC on the Markets, Volatility

Note:  The content of this article is for guidance and information purposes only and is not intended to be construed as advice. Information provided is not intended to provide investment, tax, or legal advice.