The COVID-19 Coronavirus is concerning for sure and had this type of virus occurred decades ago before modern medicine and modern communication, it would have likely been far worse. Immediate updates from media outlets we have allowed us to be able to trace every new case and do what is possible to treat the infected person and contain or track the path that could have been contaminated by that person. I truly believe the level of attention and communication will bring this virus to a quicker end with less people getting sick or dying.
All this attention on the virus does have its impact though. The investment markets have been as wild as I have ever seen them with the Dow Jones Industrial Index swinging by a 1,000 points up or down on several of the last ten trading days. The DOW itself was down by as much as 17% at one point. The DOW represents 30 very large publicly traded corporations. While the virus is scary and having an impact on many people around the world, it is not going to lead to some of the world’s best run companies being significantly less valuable long-term. Many are concerned because large numbers of people have not been at work as much these last few weeks, productivity is down and supply chains are being interrupted. These elements are true, but are very temporary and limited in their impact on companies as large as the ones investors own stock in.
In addition to the virus, news of much lower oil prices are also sending wild reverberations through the market. I find this interesting as lower oil prices is good for every single sector of the market, except oil and gas companies of course. I can promise you that executives of large companies that use lots of petroleum products such as airlines are giddy with the opportunity to stock up on cheap oil. Here is a timely article that will help you stay informed on the quick developing story.
I’ve been very proud of my clients. While I’ve certainly had conversations addressing concerns and reassuring investors that these lower prices are not long-term concerns, I’ve been much busier helping clients recognize this is a good time to consider being opportunistic by buying equites at bargain prices, making a timely contribution to a retirement account (2019 contributions available until April 15th), or considering a conversion from IRA to Roth while the prices are temporarily lower. While we can’t know what tomorrow will bring as far as a stock market outcome, I can confidently invest in well-run, well-managed companies whose stock prices have been knocked lower, but will recover those losses.
I’ve also been sharing with clients how much they are down compared to the general stock market. Depending on how much risk investors have, those number range from -2% to -9% over the last two weeks which is not what any of us want, but also not the 16% many people fear. Investors that own bonds have actually seen those increase in value recently. When money is running from stocks, the proceeds have to land somewhere and bonds and other safe havens are common sense destinations.
We are here to help navigate stressful market events like this so please let us know how we can do that. Call either office and talk with us if you have concerns or want to try and buy, or take advantage of this recent market pullback. We want to help and want to talk with you. We appreciate your patience as we are busy, but our entire team is prepared to assist you.
Finally, please know that we are paying very close attention to the situation and will continue to deliver quality financial advice that is absent of fear or emotions when dealing with your investments. We are in this for the long-run.
Thank you for your trust and confidence in me and our team.
As always, we hope you find the Weekly Market Review both informative and interesting.
Trevor N. Coe, CFP