Without a doubt, we are all feeling the impact of the COVID-19 containment efforts. Our hearts go out to those whose health has negatively been impacted as we continuously work to put an end to the spreading of the disease. Whether it is our daily routine, our children’s’ schooling, or our investment portfolio, we are all making adjustments and wondering; when will this all end?
In an effort to provide some insight into answering this question, I am providing some research on what we have already experienced during prior periods of global health concerns. The below chart illustrates how the S&P500 performed during the last 7 major global health events. Looking back at these time periods, the chart illustrates that while our daily lives were severely impacted in the short-term during these tenuous situations, markets proved resilient over the long-term.
What we do not know is how long the containment efforts will take and how severe this COVID-19 pandemic will become. What we do know is that key health officials are recommending broad sweeping containment protocols and the global population is following the recommendations in an orderly and calm manner. The side effect of the containment efforts has obviously put a strain on the global economy and raised questions of how long it can sustain these current pressures.
At this point, governments across the world have enacted both fiscal and monetary measures to ensure the global economies do not buckle as a result of the containment efforts. Yes, markets have experienced losses over the past few weeks. However, the overall strength of the monetary system is still strong, and governments alike are taking extraordinary steps to ensure their local communities do not suffer lasting financial distress.
The world’s focus at this point is to mitigate the spread of COVID-19 and once under control, our regular day-to-day routine will again be the norm. As with the prior global health events illustrated above, the global economy is expected to rebound quickly bolstered by the broad supportive economic measures actively being deployed across the globe.
In the meantime, we are taking the opportunity to capture profits from our bond holdings and repositioning into other investment options to continue to provide downside support and consistent cash flow for those taking retirement withdrawals. Given that the yield on the 10-year bond is under 1%, we are also deploying alternative cash flow distribution strategies for our clients that are either near or in retirement. More to follow on this.
Our commitment to our clients is unwavering. During this time of unprecedented events we will continue to serve our clients with minimal disruption. We have taken measures to remain fully staffed while protecting the health of all of our team and our clients. Our operations are 100% intact and our trading and cash management functionality is not impacted.
It is important for everyone to stay calm, stay focused, and to look beyond the short-term market shocks. We are all in this together and together we will make it through.
Please reach out to us at 209–957–7413 or via email at email@example.com to further the conversation.