COVID-19 and Your Investments: Insights to Help You Navigate This Unprecedented Period and Stay on Track to Your Goals.

Right now, times are challenging—the COVID-19 outbreak was swift and most people have felt the impact. It’s natural to be concerned about how the virus could affect you, your loved ones, community, finances and more. We want to help relieve some of that stress by providing you sound, straightforward analysis of COVID-19’s market and economic impact.

Fisher Investments Luxembourg’s parent company Fisher Investments is an independent US-based investment adviser. Lean on our extensive investing experience and let us be your guide through these volatile times. We’ve helped thousands of clients navigate bull and bear markets during our 40+ years in business. We can help you understand what is happening in markets now, what history suggests may happen going forward, and what that means for your investments.

Come back regularly to stay up to date. Or call us at +352 2786 7320 to speak with a qualified representative who can provide further guidance on your personal situation.

How will COVID-19 impact the markets and the economy?

When markets started falling in late February, we believe they were anticipating the economic disruption COVID-19 containment efforts would bring. Because stocks move in advance of the economy, the fast, far-reaching interruption to businesses forced markets to price in a far higher probability of economic contraction than anyone thought likely before.

Economic data released from late March on have confirmed the now-widely expected GDP declines and unprecedented unemployment resulting from temporary business closures and other shutdown measures around the world.

In May, multiple countries—the US, UK, Germany, Spain, Italy and more—began gradually reopening. Plans are of course subject to change, so when and how restrictions fully ease remain to be seen, but in our view, economies safely re-opening and remaining open should be a positive for stocks.

We do believe the economy will eventually recover, and for investors, it’s critical to know stocks usually rebound before recessions end, according to our research. Although it’s too early to tell whether the bear market already hit its low, stocks have generally risen since late March. In spite of this, we’ve seen widespread pessimism. This is normal as markets rise. Pessimism and scepticism continued for many years after the 2008 bear market ended—well after stocks surpassed their previous 2007 high. Fortunately, stocks don’t need widespread optimism to rise. In fact, pessimism can lower the bar for news that creates positive surprise.

Can "stimulus" save the economy?

Global governments and central banks have announced stimulus efforts to blunt the virus’s economic impact. Stimulus efforts can help soften the blow during crises, but they are never a cure-all. Whilst these efforts may present silver linings—especially for negatively affected individuals and small businesses—we don’t expect them to be the cause of the economy’s or market’s eventual turnaround.

So far, the Bank of Japan and the European Central Bank expanded their asset-purchasing programmes, also known as quantitative easing (QE). The Bank of England restarted QE and drastically reduced interest rates. The US Federal Reserve did the same, then enacted further unprecedented measures to try to support the financial system. And we’ve seen sweeping fiscal stimulus from the UK, US, Germany, France and Canada.

In our view, these efforts are a mixed bag. They may prove beneficial in the short term—especially as cash-starved small businesses like restaurants, shops, daycares and more try to recover. But other QE efforts may create unintended negatives, such as making banks less eager to lend.

Fiscal stimulus could help jumpstart demand in a longer recession and provide a tailwind during the recovery, but we believe the immediate impact is likely limited. Fiscal policy takes time to implement and work through the economy. 

When will the bear market end?

We don’t know, and we don’t believe anyone else can tell you either. In our opinion, this bear market’s duration depends on how long COVID-19 lingers and how long governments, people and businesses limit economic activity. We can tell you that though the beginning of this bear market was unique, investors’ reactions to it are not.

This suggests the eventual recovery will follow a typical pattern. Bear markets typically end after investors’ expectations become so bleak they depress stock prices to irrationally low levels. From there, any small positive can send stocks surging into the “V”-shaped recovery of a new bull market. 

What does this mean for my investments?

We’ve long believed the riskiest thing investors can do is miss the market up days they need to achieve their long-term goals and objectives. That’s true today, too. Though we can’t be sure how long the volatility will last, at best, changing your investing strategy now will likely lock in losses and, at worst, derail you from the investing goals you’ve been saving for.

Each investor is different and your particular circumstances must be taken into account, but overall we recommend staying the course and focusing on your long-term investment goals. Remember, stocks’ historically high long-term returns include all bear markets. Being patient and staying in the market now will help ensure you are able to benefit when the next bull market begins.

We know this won’t be easy, and we want to be a resource for you. Contact us—we’d be happy to help you stay on track.

How is Fisher Investments supporting investors during COVID-19?

During these volatile times, it is more important than ever that we maintain our excellent level of service. As always, we deliver proactive and increased communications. As the COVID-19 situation evolves, clients hear regularly from their dedicated Investment Counsellors, who keep them up-to-date on portfolios and our strategy. 

How can the Fisher organisation help me?

The coronavirus’ toll on human lives and communities has been tragic, and the resulting financial strain on people and markets hasn’t made it any easier. Many investors feel like they’ve been thrown off course in their efforts to reach their financial goals.

Fisher Investments Luxembourg and Fisher Investments have been through bear markets and pandemics before, and we’re here to help now. Contact us online or by calling +352 2786 7320. We’d be happy to share our perspective to help get you back on course during these volatile times.

Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.