Right now, times are challenging—the COVID-19 outbreak was swift, its impact nearly universal, and numerous regions around the globe are still experiencing outbreaks. It’s natural to be concerned about how the virus could affect you, your loved ones, your community, your finances and more. We want to help relieve some of that stress by providing sound, straightforward advice on COVID-19’s market and economic impact.
Lean on our extensive investing experience and let us guide you through these challenging 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 might mean for your investments.
Come back regularly to stay up to date. Or call us at 888-823-9566 to speak with a representative who can discuss your personal situation.
When markets started falling in late February, we believe they were anticipating the economic disruption COVID-19 containment efforts would bring. GDP declines and unprecedented unemployment resulting from temporary business closures and other shutdown measures around the world have weighed heavily on economic activity.
In the US, new COVID-19 cases have been rising since June and some states have paused or rolled back their reopening. Similarly, localized virus outbreaks in other countries such as China and Australia have prompted local authorities to implement targeted lockdowns. While this is undoubtedly bad news from a public health perspective, we caution against drawing market conclusions from it. Investors have long been aware of the risk of a second wave of COVID-19. We believe a second wave would need to be worse than presently feared to further sway markets.
We are confident the economy will eventually recover, and for investors, it’s critical to remember stocks usually rebound before recessions end. We believe this time is not an exception, as stocks have generally risen since March 23. In spite of the recovery likely starting, we’ve seen widespread pessimism. This is also normal as markets rise. Pessimism and skepticism continued for many years after the 2008 bear market ended—well after stocks surpassed their previous 2007 high. As legendary investor John Templeton said, bull markets are “born on pessimism,” so it shouldn’t be surprising to see the stock market rising on a dearth of optimism. In fact, pessimism can lower the bar for news that creates positive surprise.
Visit our MarketMinder page to stay on top of COVID-19 market and economic updates.
Global governments and central banks have rolled out monetary and fiscal aid efforts to blunt the virus’s economic impact. Such efforts can help, especially for negatively affected individuals and small businesses, but we don’t expect them to be the cause of the economy’s or the market’s eventual turnaround.
The Bank of Japan and the European Central Bank expanded their asset-purchasing programs, also known as quantitative easing (QE). The Bank of England restarted QE and drastically reduced interest rates. The Fed did the same and enacted further unprecedented measures to try to support the financial system.
In our view, these efforts likely yield mixed results. They may prove beneficial in the short term—especially for cash-starved small businesses. Fiscal stimulus could help jumpstart demand in a longer recession and provide a tailwind during the recovery. But QE efforts may create unintended negatives, such as making banks less eager to lend.
See our latest insights on global stimulus efforts here.
We believe the bear market ended on March 23rd, making it the shortest bear market in modern history. Between February 19th and March 23rd global markets fell very sharply, but then recovered most of their declines. While economic news isn’t entirely positive and investors still seem pessimistic, conditions seem to be improving. The economy is slowly emerging from lockdown and retail spending is rebounding in many areas. We believe the sustainability of the current bull market depends, in large part, on investors continuing to see a brighter future when they look 12-30 months ahead.
For more data and details on our current perspective, download our Stock Market Outlook.
We’ve long believed the riskiest thing investors can do is not stay sufficiently invested in the market long enough to achieve market-like returns (or better) over time. Time in the market is critical to achieving most investors’ long-term financial goals. However, too often, investors try to time the market and end up missing some of the market’s best days. Short-term volatility is always possible and should be expected. But if you have long-term investment goals over 10, 15 or 20 years or more, deviating from your long-term investment strategy because of short-term market volatility can be dangerous. Remember, stocks’ historical long-term returns of about 10% include all bear markets.[i] Being patient and staying disciplined to your long-term investment strategy are the keys to long-term investor success.
Although some investors may think it’s better to steer clear of markets until “things calm down” or news starts to look more positive, the world rarely gives an “all clear signal.” Stocks often begin their ascent out of a correction or bear market well before bad news has subsided—pricing in a better economic future. The stock market recovery that began on March 23rd when many countries were still in lockdown and economic data were dismal is an excellent example of the tendency of stocks to move before the economy recovers. This time, as is often the case, if you waited for an “all clear signal” you would have missed out on substantial market gains.
We know investing through tumultuous markets is not easy, and we want to be a resource for you. Contact us if you’d like to hear more about our current views on the market or if you’re interested in learning more about our services.
During these volatile times, it is more important than ever that we maintain our excellent level of service. As always, Fisher Investments provides proactive and personalized communications that respond to our clients’ needs, concerns and interests. As the COVID-19 situation evolves, clients hear regularly from their dedicated Investment Counselors, who keep them up-to-date on their portfolios and our strategy. We’ve also expanded our digital events this year, offering over 100 conferences and webinars per month, enabling thousands of clients to interact virtually with senior members of the firm.
Further, we help investors cut through the media noise by providing straightforward, fact-based information on market volatility and COVID-19 across our many digital platforms. Beyond this page, our daily blog, MarketMinder has been addressing COVID-19’s impact to stock markets since January. We regularly write articles for publications, such as Reuters Plus and GuruFocus, and offer multimedia updates through social media: YouTube, Facebook, LinkedIn and Twitter. Two podcasts—Market Insights and The Well-Read Investor—are additional ways we share ideas and connect with clients. Ken Fisher also writes regularly for Real Clear Markets.
COVID-19’s 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.
We’ve helped clients through bear markets and other periods of volatility and uncertainty before. And we’re here to help now. Contact us online or by calling 888-823-9566. We’d be happy to share our perspective to help get you back on course during these difficult times.*
Download our latest Stock Market Outlook for a fresh, level-headed perspective on where we think markets are headed and why.Read Now
In this 8-minute video, we discuss how COVID-19 relates to recent volatility and what it may mean for your portfolio.Watch Now
Senior Vice President of Research Aaron Anderson shares Fisher Investments’ views on economic impact of COVID-19.Watch Now
Listen to our Market Insights Podcast and learn what the CARES Act provides in response to COVID-19’s economic disruption.Listen Now
[i] Source: FactSet, Global Financial Data, Inc., as of 03/27/2020. Annual S&P 500 Index total returns, 12/31/1925 – 12/31/2019. Average annualized return of 10.1%.
* The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated herein. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.