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Coronavirus and Market Volatility: What Investors Need to Know

Coronavirus and Market Volatility: What Investors Need to Know

March 12, 2020
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From ravaged Costco shelves to deserted airports, Coronavirus has certainly left its mark on our country over the last few weeks. 

With all the hype around Coronavirus and market volatility, it’s easy to assume causation. But the Coronavirus, while a catalyst for market volatility, is not its cause. We are seeing a repricing of the overall market, a result of many moving parts all coming to at a head at once. These include changes in the prices of commodities — namely, oil — that require a rebalancing. This type of rebalancing is iterative and to be expected.

GWS Portfolio Performance

In an environment where many asset classes are down, including gold and the dollar, there aren’t many places to hide. But the places we’ve found shelter have been very effective.

Looking Ahead

We don’t anticipate a recession or big economic problems. While prices could still drop further, it’s unlikely that they will, and global governments continue to take actions to stimulate markets. Plus, with retailers needing to restock their shelves after Corona virus preppers and also refresh inventory mid-year for the holiday season, we anticipate an increase in production and GDP later this year.

In summary, our inclination is that the next trades will be adding risk to portfolios, not selling to become more defensive. However, the coming weeks’ data points and market action will be crucial. Patience and adherence to plan is the best course of action.

Remember That Cash Planning Conversation?

As our clients know, cash planning is one of the most important services we provide at GWS. That’s because an appropriate cash reserve insulates your portfolio from being liquidated at the wrong time, essentially preserving your wealth during volatile times like these. This can actually be a very opportunistic time for you as an investor, if you’re willing to become aggressive in your equity exposure and take advantage of the discounted prices we are seeing.

The bottom line? It’s important to take the long-view in situations like these, while still remaining opportunistic.

Please don’t hesitate to reach out to your advisor if you have questions, wish to change your equity exposure, or would like to discuss further. If you’re not yet a client of GWS and would like to learn more about our firm, please let us know how we can help or give us a call at (314) 924-5100.


Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This Research material was prepared by LPL Financial Research and the financial professionals at Gatewood Wealth Solutions. All information is believed to be from reliable sources; however LPL Financial and the financial professionals at Gatewood Wealth Solutions make no representation as to its completeness or accuracy.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.