As the Coronavirus spreads around the globe, worry is mounting in the U.S. Investors are concerned about the impact on an already fragile global economy. In the final week of February, stocks posted their biggest losses since the financial crisis, wiping out all of the gains from this year. This isn’t the first time stocks have been impacted by a virus. During the SARS outbreak and the Zika virus, the markets also declined but eventually recovered. The big question is: What is going to happen this time and how will it impact the U.S. economy over the coming year?
We believe the U.S. has a solid healthcare system, and the year started with solid economic data. We aren’t seeing a visible impact on the job market and demand for goods remains strong, which is all good news for the economy and stocks. We are anticipating growth in Q1, but we most likely will see more of an impact from the Coronavirus in Q2. Factories in China are operating at about 50-60% or struggling to reopen. This could be an issue for the U.S since China is home to seven of the world’s busiest container ports. The revenue and earnings from companies that depend on China could be affected. We also might see inventory being depleted, but once we see the virus start to diminish, we should see a faster accumulation of inventories in the second half of the year.
While we continue to follow what happens, we believe investors should be taking an active role in their finances and focus on saving enough for the future. Emotions are high right now and impacting a lot of investors’ decisions. We recommend you have appropriate risk for your age and how close you are to retirement. This means you are diversified and reallocating assets as necessary. **
We know it’s a confusing time and we’re here to help make sure your portfolio's risk is appropriate for your goals so you can achieve your retirement dreams. Our passion for research means we’re working to consistently analyze your returns, and our attention to detail allows us to adjust different aspects of your financial roadmap to help keep you on track. All of our investment research is done in-house. We use our own models, review accounts every day and rebalance quarterly.
We remain optimistic the drops we are seeing in the market will be short lived, so don’t panic and stay invested! If you have questions about the market or your retirement investments, contact us today.
** A diversified portfolio does not assure a profit or protect against loss in a declining market.
** Asset allocation will not guarantee a profit or protect you from loss however, it may provide a hedge against risk and create opportunities in both bull and bear markets.