Broker Check

Monday Money Report

| June 08, 2020

The markets continued to recover last week, with the S&P 500 gaining over 5%.  We are close to being positive on a year-to-date basis.  There are three big factors behind the success of big, publicly-traded companies.  The Fed has provided enormous amounts of liquidity and support to the markets, and traders are expecting the Fed’s meeting next week to provide more support. The May jobs report was much better than expected, with the unemployment rate dropping to 13.3%, based on 2.5 million new jobs added in May. Finally, the markets are forward-looking, so they are anticipating the economy restarting, and people going back to work.

This is great news for our retirement and other investment accounts. It’s not a guarantee the economy is fully recovered or will do so any time soon.  We still recommend building cash reserves.  We expect there will be a trickle effect, as small businesses who have been able to absorb short-term losses begin to feel the impact of the shutdown and phased re-opening.  If there is a second wave of infections, we may see another drop in the market. Cash reserves are critical.

Once you have those reserves, what do you do next? Pay down debt, especially credit card or other non-secured debt.  In most situations, I am not a proponent of paying down mortgages, but credit cards, car loans, and student loans unless you are on a public-service loan forgiveness program are all places to put extra cash.  Start with the highest-interest rate debt first.

If you’re already debt-free except for your mortgage, and you’re contributing enough to receive the full match on any employer-sponsored retirement plan such as a 401(k), or the federal Thrift Savings Plan, then you can look into other investments.

Right now, you might be looking at the market and wondering why your accounts are not fully recovered. Chances are, you have a diversified portfolio.  You don’t just own the S&P 500.  You probably have smaller and mid-sized US company stocks, some bonds, some international or emerging market stocks. Each of these asset classes is recovering at a different rate.  And the companies inside those classes are all different as well.  As financial professionals, we recommend a diversified portfolio for one big reason: to limit volatility, or ups and downs, in your accounts.  Based on how long you have until the goal for your investment (college, retirement, a second home), and how much risk you are willing to take, we build portfolios with different amounts of each asset class.  We’re looking to build a portfolio that will perform within a range that accomplishes your goal while still allowing you to sleep at night.  The important thing is to make sure you are on track to reach your goals, and not account performance in and of itself.

 If you want to learn more, join us for one of our virtual education events.  You can visit us at or our Facebook page to learn more.  

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, come talk to us. This is Ann Alsina with CovingtonAlsina.