Over the last several weeks we have seen a dramatic turn of events in the financial markets. After a relatively calm start to 2020, the current environment has been characterized by uncertainty, fear, nervousness, and high volatility surrounding the COVID-19 outbreak and its resultant impact on the economy and financial markets.
Despite our best efforts to stay in front of developments in the financial markets, the abrupt nature and speed of the decline has come as a surprise to us all and we are actively monitoring developments as they unfold. As we move forward, it appears a material slowdown in economic activity will take place along with the high probability of a recession in the U.S. Given the many unknowns surrounding the spread of COVID-19 and its ultimate impact on the U.S. economy, it is difficult to make any definitive predictions at this point as more data is needed. It is our belief that advances will need to be made on the medical front in terms of treatment and containment of the spread of the virus before any material improvements will be seen in the U.S. economy and financial markets. The current fiscal and monetary stimulus actions, while helpful to blunt some economic and financial market downside, are merely treating the symptoms of the disease. Volatility is likely to remain high until treatment and containment efforts bear fruit. However, despite the volatility and uncertainty at this point, we believe treatment and containment efforts will bear fruit, and we do not recommend panic and the abandonment of long-term objectives.
Market volatility, bear markets, and recessions are a recurring feature of our capitalist economic system and just as we have made it though turbulent periods in the past, we will make it though this period as well. We believe to successfully navigate this environment, it is essential to keep the big picture in mind, i.e., your long-term goals. Moreover, for those with the appropriate risk tolerance and time horizon, environments like this provide attractive investment opportunities. Everyone touts the old market maxim, “buy low, sell high.” What they don’t tell you is that buying low is typically characterized by uncertainty, fear, and panic. Buying low is very difficult for most people. While the current situation can certainly get worse and markets can continue to fall, we believe a “buy low” opportunity is at our doorstep.
If you have any questions about the market or your portfolio, please contact your financial advisor at Raskob Kambourian.
Raskob Kambourian Financial Advisors is an independent, fee-only comprehensive financial advisory firm registered with the Securities and Exchange Commission. We offer expertise, competitive pricing, and personalized financial services to meet your “Life Planning” needs.