Yesterday’s market rise – the largest in percentage terms for the Dow Jones index since 1933 – reflected investor optimism that Congress will reach a final agreement about a stimulus package to support the US economy and American workers and companies. In fact, that agreement was reached overnight.
Bigger picture, though, there is valid concern that the coronavirus outbreak in the US is still in its early phase. It appears that our infection rate and fatality statistics are trailing Italy by about two weeks. So, over the next couple of weeks we may continue to see the statistics double every two to three days, which has severe implications for our health care system.
We can expect continued volatility in the markets, as investors look gain clarity about the impact this outbreak will ultimately have on US and global economic growth and, accordingly, on corporate profits.
What’s an investor to do, in such a time of uncertainty? We would go back to our analogy of trip on a plane that’s encountered severe, unexpected turbulence. What does the pilot instruct you to do? Remain in your seat, fasten your seatbelt (and don’t move about the cabin!), and wait for the turbulence to subside. Though the pilot may not know how long the disturbance will last, he’s confident you’ll eventually emerge from it. The same, of course, applies to investors in the markets right now.
Four Things You Can Do Right Now
Finally, this morning we participated in a conference call with some fellow advisors and investment managers. We wanted to share with you the following, which one of the participants shared with us, and which we found encouraging.
Take care of yourself. Sleep more, eat well (healthy!) and get some exercise, to support your immune system. Take a walk, go for a jog or a run. Find an online yoga class. Pet your dog(s) or, even better, take them for a walk.
Call someone. At a time when we’re being asked to physically distance ourselves from each other, a phone or video call can mean all the difference to a friend or family member.
Be aware of how much (financial) media you’re consuming. There is not a lot of information that can be gleaned from a market that is gyrating so wildly in the short-term. If you have questions, call your financial advisor. If you don’t have one, consider hiring one. But do your homework first.
Keep things in perspective. The most important thing is your health, and that of your loved ones. If we do the right things (social distancing, hand washing, etc etc), this will not be as bad as we think, and it won’t last as long as we think.
Keep the faith, be safe, and stay healthy.
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