March 20, 2020
Good day everyone,
We fully understand that the business disruption being experienced by all and the profound impact to our current day to day activities is unprecedented. As an advisory partner to you, your family and your business we appreciate the challenges you are currently facing including the anxiety you are feeling from the avalanche of new health and financial communications due to the global COVID-19 outbreak.
This past week has been exceptional, to say the least. As the world is thrown into unfamiliar waters, we’ve all been forced to re-calibrate every aspect of our lives, balancing the well-being of our families and with that of our businesses. The book on COVID-19 in terms of its impact on families, life and business is being written each day, if not every hour.
Every economic market has its unique ebb and flow and the historical facts to support the results. In general, economic forecasts for financial markets for 2020 looked towards a favorable year despite a gradually slowing economy. Unfortunately, the global outbreak deemed a pandemic by WHO on March 11th and an emerging oil war, changed everything. The speed and magnitude of this capital market selloff has created a market pessimism similar to 2008 yet there are very different causes.
In our experience, all market downturns begin with an investor over-reaction of fear and selling capitulating toward the market bottom. Eventually an end comes into view as investors begin to look for the early signs of any recovery. It is already clear, this time around, it will depend on the positive news associated with controlling the virus and eventually stopping its spread.
As an investor, basing investment decisions on extreme scenarios and trying to make investment changes in today’s environment of extreme volatility is very challenging – nobody ever makes a dollar by panicking. Being too short-term focused may do more harm than good given recent economic intervention by Governments around the globe and in particular, the efforts being carried out each day by the investment fund managers at the helm of your portfolio – make sure you have a diversified portfolio and stay long term focused.
Given the current level of uncertainty, we cannot predict when or how this end. Will it be a lengthier “U” recovery or a sharp and quick “V” recovery? History has shown one thing to be certain, capital markets will recover, and you will want to be part of it.
Historically, we’ve faced down challenging situations before and have overcome them. In that regard, this time is no different.
Matheis Financial Group