Updates and Straight Talk on the State of Things

Written by Chris Draughon

I want to see you achieve your financial goals so I spend my time making the complicated things simple. As the Director of Financial Planning I help our clients identify their most important financial goals and develop paths to get them there on time with room to spare.

March 18, 2020

We’d like to thank those of you who have reached out to us to discuss the current climate and our views on both present and future expectations for markets and economic impacts of the Coronavirus challenges.

We feel the best thing we can do in this environment is keep everyone informed as developments unfold. We know you’re getting bombarded hourly from social media and news outlets. Our goal is to sort through all the data and summarize it here for you. We follow more than a dozen highly regarded and nationally recognized outlets from Wall Street research firms, medical research facilities, and government health organizations. These include the WHO, HHS, NIH, and the CDC. We receive frequent updates and participate in daily conference calls. Here’s the latest we are hearing as of this morning’s reports:

On the medical/healthcare front, the next few weeks will contain an abundance of both new and “old” data. (That is, data that has been collected over the past three weeks but not yet sorted and shared.) Examples include: the availability of testing kits, the number of reported cases in the US, and forecasts for the coming weeks. Because this data hasn’t yet been shared and is still being complied, we expect the reports will show a significant ramp up in number of confirmed cases. You can be sure the media will certainly sensationalize it, even though healthcare officials have made it clear they are playing catch up on older data.  Healthcare administration officials addressed this in today’s White House news conference earlier. You can view it here.

We encourage readers to maintain perspective as data becomes available. The bottom line is, we expect the data to be alarming to some regarding the increase in cases. Remind yourself that it’s cumulative data from the past 3-4 weeks.

As for the markets and economy, we expect the next few weeks will continue to look like the last two weeks. This means daily fluctuations – both up and down – for stock and bond markets. We know this is unsettling to investors. Markets are simply trying to price in their expectations for the impact this will ultimately have on US economic health once the virus is contained and life returns to normal.  Unfortunately, it’s a messy process in the early innings because data is limited. We saw similar market activity during the Financial Crisis of 2008.  But we feel compelled to point out this is most certainly not 2008. For more  perspective on that, we encourage you to watch this link of First Trust’s Chief Economist Brian Wesbury’s latest summary – it’s only 3 minutes long but it’s informative.

As more daily data is compiled and shared, the range of the expected economic impact will narrow. That will result in less market volatility. But it will take some time.  Congress, the White House, and the Federal Reserve are rapidly developing financial relief strategies for both families and businesses. You’ll begin to see these implemented in the next week or so.

Finally, we know the viral outbreak will peak and end. The sooner the public adheres to the CDC’s recommendations, the faster we can move on.   

Our advice to everyone – clients, friends, etc., – is to buckle up and ride it out. Historical evidence is in your favor that portfolios recover more quickly if you stay invested through thick and thin rather than trying to jump in and out of markets. In addition, we recommend accumulating liquid assets for the other side or this, because we may not see another buying opportunity like this in our lifetimes.

We will keep the research updates flowing. Lastly, we offer this link to a good read on how viral pandemics grow and then disappear.

We will be back in touch soon. Don’t hesitate to call.

Your First Coast Wealth Advisors Team