The novel coronavirus leading to the disease COVID-19 is causing both physical and financial sickness. Because this is a new virus, little is known about how it will unfold across the global population and economies, and this uncertainty is driving a lot of market volatility. This uncertainty requires that prudent measures be taken by governments and individuals. I encourage clients to remain informed through objective and well vetted information sources. For your health planning, you should visit the U.S. Centers for Disease Control & Prevention and the North Carolina Department of Health & Human Services. For your financial planning, you should consult your financial planner and read more about What You Should Do below.
COVID-19 & The Market
The market is responding to the uncertainty driven by COVID-19 exactly how markets do: volatility in asset pricing. Because this is a dynamic event with new information emerging daily (if not hourly), the market is continually repricing its reaction to this information. Add to this mix the responses of policy makers (e.g, the Federal Reserve and other central banks), a social-media driven news cycle, the interconnectedness of global supply chains, and a pricey stock market and you get the current daily market noise.
The Good News
History has shown that investors that do not react to volatility will be rewarded. Assuming you’ve maintained a balanced and risk-adjusted asset allocation, your portfolio should already be positioned to manage volatility consistent with your risk tolerance, risk capacity, time horizon, and investment objectives. As this event plays out across the global economy, there will likely continue to be volatility (both upward and downward stock movements). This is among the worst times to try to make structural changes in your portfolio.
What You Should Do
Now as always, it’s important that investors realize this is what it means to be invested in the market, and that is why it is so important that you have and stick to a financial plan. This means you should:
- Ensure you have adequate cash flow to cover the next 2-3 years,
- Keep your portfolio in balance by revisiting your current asset allocation versus your target asset allocation a couple times a year and ensure you are within 5% of your target allocations,
- Continue to fund your financial goals with regular savings contributions, and
- Stay mentally prepared for steep short-term losses and employ the wise counsel of your financial planner as needed.
Following these four steps will help you maintain your financial wellness!
Doing Our Part
At Sycamore, we take the well-being of our clients and our staff seriously. Accordingly, we have implemented safety protocols within our office to maintain the health and safety of our team and our clients. These include:
- Remote Meeting Availability: We are offering clients the option of conducting their meetings with Sycamore remotely via Zoom web conferencing or by telephone.
- Regular Sanitation: We regularly sanitize our office space at the start of every day and between client visits with an emphasis on doorknobs, reception area, and meeting spaces.
- Hand Washing: Staff members are required to wash their hands between client meetings and throughout the day.
- Social Distancing: Staff maintain a distance of at least 3 feet whenever possible.
- Sick Days: Any staff member that feels ill is not to report to work, no exceptions. Any staff member with an existing medical condition or who is immunocompromised or has a close family member within the household where this applies is required to work from home.
We wish you well through this turbulent time, and please let us know if we can be of help to you and your financial plans!