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Monday Money Report

| March 23, 2020
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Oh my. Through Thursday of last week, the markets continued to drop, down over 25% from the record highs earlier this year.  That sounds terrifying, doesn’t it? On the surface, it certainly does.  But for some perspective, consider that this drop brings us back roughly to market levels from three years ago.  Meaning that, as a whole, the markets are priced about where they were in 2017.  Not quite as terrifying.

There is a ton of uncertainty out there, not just about our investments and the market, but our daily lives: work, school, health, family.  What we do know for certain is that markets have been through crazy things before, and they bounce back. Which means that selling now because you’re scared is just as silly as panic-buying and hoarding toilet paper.

There is a lot of good news out there. The Federal Reserve has refinanced a large amount of our federal debt, which helps our country because we will be paying less interest on that debt for years to come.  Multiple companies here and in the UK, like GM, Rolls Royce and Dyson have either offered or already started switching their manufacturing lines to building ventilators and other needed medical equipment.  Multiple drugs are being tested for efficacy in treating the disease, and we’ve already started clinical trials on a vaccine. Our supply lines – getting food to grocery stores, raw materials to companies, and wine to our homes, are holding up. The federal government has pushed back the deadline for tax payments to July 15th.  The Federal Reserve and the European Central Bank have both taken extraordinary measures to keep liquidity in the financial system.

The US government has passed round two and is working on round three of a stimulus package. In Maryland, we have filed the paperwork to be declared an Economic Disaster Area, opening up SBA loans with looser underwriting standards to small businesses affected by the shutdowns.

America generally doesn’t do a good job of preparing.  We wait until we’re sucker-punched, and then we respond with a vengeance. There is an urban legend that still resonates, that after Pearl Harbor, when most of Japan was celebrating the success of the raid on our battleships, Admiral Yamamoto said “I fear we have awakened a sleeping giant and filled him with a terrible resolve.”  We are on war footing now, and our country will respond.

If you want to take action on a personal level, some ideas:

  • Consider a partial Roth IRA or 401(k) conversion. This is a taxable event, so consult with your tax advisor, but the move can have a significant impact in retirement.
  • Look at refinancing your mortgage. Rates are hovering around 3%, the lowest we’ve seen since they began tracking mortgage rates.
  • If you have after-tax, or non-qualified accounts, look at tax-loss harvesting. It can be a good time to reduce concentrated stock positions you might have held on to because of capital gains.
  • Increase your retirement account contribution rates. Buying low is like eating cold, wilted spinach. It doesn’t taste very good going down, but it is good for you.

 There’s a lot more information about the market on our website at www.covingtonalsina.com and our Facebook page, www.facebook.com/covingtonalsina.  We’re sending out emails with research and investment commentary, and you can sign up on our Facebook page for that as well.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.

And if you don’t have a financial advisor, or you haven’t heard from yours, come talk to us. This is Ann Alsina with CovingtonAlsina. 

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