Mission Statement:
To financially empower our clients so that they can achieve their most
important goals and to confidently plan for the future that they envision
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The Coronavirus Q&A that everyone
wants to see
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Alright everyone! Listen up. There's an awful lot if information going around and it's tough to absorb it all. This is a very basic Q&A based on conversations that I'm having with clients, other financial advisors, and journalists.
First, The other financial advisors I am speaking with are all doing their darnedest to make sure they are acting on and disseminating accurate information. We are all preaching the same things; remain calm, panic is a poor strategy, investing in the stock market is a long term thing, and make sure you have the cash you'll need for near term financial obligations out of the stock market.
I know it was hard to do that with the stock market jumping over every hurdle in 2019. But shit happens. We call them "black swan events".
Second, financial journalists are in overdrive. They are vetting so much information, it would make mere mortals' heads explode. I speak with media people all the time. They are checking, double checking, and triple checking their sources. For obvious reasons, this is incredibly important. It's also super important because the masses are getting sucked into the "what if" whirlpool. When investors don't have accurate information or perspective, it leaves the door open just enough for conspiracy theories and endless extrapolations to spread. Journalists are doing everything they can to stop this so they don't send more people into the whirlpool.
Let's get to the Q&A:
- Why is the stock market tanking? The world has never seen a supply chain disruption like what we are experiencing now. Supply chains are even more interconnected now than they were in 2008-2009. That means that the world could be in for supply shortages; auto parts, electronic components, etc. Quarantines in major Chinese industrial regions are keeping workers home. Apple, 3M, and other companies have already warned that this will crimp their supply chains.
- Is a recession coming soon? My sense is it is still too early to determine. The U.S. consumer is coming into coronavirus worries with a lot of momentum. A slowdown could feel as bad as a mild recession, though. Things I am looking at to get a better handle are rising unemployment, empty shelves at retailers, and an avoidance of places of gatherings. Only the last one has become evident; conventions are being cancelled and airline stocks have cratered. Regardless, investors aren't waiting for the first two to come true. They are anticipating a recession. The Eurozone-debt crisis, the downgrade of U.S. Treasury's, and the trade war with China were all expected to throw the U.S. economy into a recession. With each successive calamity, the feeling of doom becomes more intense. Now is no different. I do think this current bout is worse because of the potential for people to lock themselves in and because of the global supply chain disruptions. What happens when F150 owners can't get new parts? How does that influence construction jobs? The chain reaction is frightening to think about.
- Should I buy stocks now? Hold on, Sparky! Investors went from confidently buying the dip on Monday and Tuesday to being afraid to buying anything now. Are you buying something now because it has a proper fit in your investment portfolio or because it is down and you want to buy it for a quick rebound? Please decide which answer to those questions suits you best. Are you the boss of your investments or is the stock market the boss? I don't buy stocks, put on hedges, or whatever, just because the stock market dictated that to me. It is always based on a portfolio decision. Yes, stocks are down, but that doesn't mean they are automatically a good value for YOU.
- Will the Federal Reserve cut rates to help the economy and stock market? Yes. But that won't cure the coronavirus. It'll help to mitigate problems in the credit markets and banking functions.
- How long will this last? I won't even give you a guess. I hear until the weather gets warmer in the Northern Hemisphere. This helps every year with influenza. But if Q1 and Q2 earnings and GDP estimates are shot to hell, then Q3 and Q4 won't be enough time for the global economy to recover. To me, that means that the stock market retreat is justified. It's just that markets adjust in real time these days due to advances in trading technology (algorithms, electronic trading) and the speed of information flow.
- Is there any good news out there? Yes. Mortgage refi's are going gangbusters. Stocks are down a lot and I see a lot that are worth nibbling on - the ones that make a good fit for my clients' portfolios. I am not concerned about catching the trading bottom of this swoon; mainly because I think it's a fools errand to try and because I don't feel like watching my screens every minute of the day is doing me or anyone else any good.
Those are the main questions, but certainly not an exhaustive list. I am available to you, so please reply me with additional questions or email or call me.
Moving on, I was live on LinkedIn and Facebook on Monday, to give an overview of the mayhem on that day. The Dow went down over a 1,000 points and I said if it goes down 1,000 points everyday, we'll be at zero in 28 days. Now, I'd have to change that 24 days. The knowledge and perspective I shared are in the highlight videos below. It all applies today just as much as it did on Monday. I really did drop nuggets, so please take the time to watch. In these videos I tell you what to do and what not to do during market plunges.
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Please tune in, thanks!
Mitch
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I'll be live again on Monday, 3/2, at 4:30 with PM an update. It'll be a serious one, so please be sure to watch. I would welcome your questions in the comments.
On another note, on my episode of Be The Boss of Your Money this week, I interviewed Jahn Levin, founder of Purity Products. We had a blast! He built his company into a nationally recognized leader in nutritional supplements. He shares how he did it, his management tips, and more. He's a brilliant man and I am so happy he stopped by to share his knowledge of business marketing and management. Please enjoy the video. And grab a pen to take notes!
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I host a live stream every Wednesday at 12:30 PM EST, called Be The Boss of Your Money. Please tune in.
Like you, I'll be keeping a watchful eye on the weekend news. One thing I will not do is fret about the market going lower. My clients investments are set up appropriately so that bear markets are anticipated. I wouldn't change anything if the Dow was up a few thousand points this week and same goes for the other way. This too shall pass!
Thanks and have a great weekend,
Mitch
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Want to schedule a phone appointment with me to speak about your financial goals? click the "Let's talk" pic.
Or email me directly:
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I opened ClientFirst Strategy, Inc. because I believe that the only way to help my clients potentially achieve their goals is by offering unbiased advice & investment management expertise. To my clients, thank you for your continued vote of confidence. If you are not a client but would like to explore the possibility of becoming one, I invite you to call me directly, visit my website, join my email list, and/or connect with me on social media.
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Mitchell O. Goldberg
AIF®, AAMS
President | Investment Professional
OSJ Manager
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ClientFirst Strategy, Inc.
290 Broadhollow Road, Suite 200 E, Melville, NY 11747
(D) 631-920-6622 (F) 631-920-6624 (C) 516-818-0338
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All the views expressed in this report/commentary accurately reflect our personal views about any and all of the subject securities or issuers and no part of our compensation was, is, or will be, directly or indirectly related to the specific recommendations or views we have expressed in this report. This material is not intended as an offer or solicitation for the purchase of sale of any security or other financial instrument. Securities, financial instruments, or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from securities or investments mentioned in this report may fall against your interests, and you may get back less than the amount you invested. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. You should consult with your tax adviser regarding your specific situation. Diversification is a method of managing risk and doesn't protect against loss in a down market. The S&P 500 and Dow Jones Industrial Average are indexes. It is not possible to invest directly in an index. *The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. **The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy.
Securities and investment advisory services offered through NEXT Financial Group, Inc., member FINRA/SIPC. ClientFirst Strategy, Inc. is not an affiliate of NEXT Financial Group, Inc.
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