Coronavirus is on everyone’s mind with its effects being felt worldwide. The markets are extremely volatile, and we’re all concerned for the health and safety of our families, friends, and colleagues.
Here in the office, we continue to adjust to the realities of today, which include the implementation of our business continuity plan and our capability to work remotely. We have invested in some of the industry’s leading investment and financial planning software, and are focused on being readily available and responsive to your needs as we provide our uninterrupted services and counsel on an on-going basis.
Putting today’s current events in perspective, this is clearly a stressful time with the pandemic pushing stock prices into bear market territory. Thankfully, we are facing these challenges with the most talented medical professionals on the front line. Our Federal Reserve and elected political officials are also taking aggressive steps in confronting the crisis.
On the policy front, the Federal Reserve today announced a multifaceted $4 trillion liquidity program with an aim to stabilize financial markets and support both small businesses and U.S. workers. The key elements of the Fed initiatives are as follows:
- Unprecedented intervention by the Fed in the corporate bond market.
- An open-ended commitment to buy Treasury and Mortgage backed bonds, with the goal of keeping borrowing costs (i.e., interest rates) at low levels.
- In support of large corporations, the Primary & Secondary Market Corporate Credit Facilities have been created to provide liquidity to the corporate bond market.
- And coming soon, the Main Street Lending Program with a mandate to support small and medium-sized businesses, in partnership with the Small Business Administration.
With the closing of schools and businesses in the United States and overseas, a global recession is clearly taking hold. Fiscal and monetary policies unleashed around the world will eventually stabilize financial markets, but the recovery will take time. Investors can gain some comfort reflecting on the resiliency of our country during past crises, although it doesn’t calm our present fears which are being stoked by alarmist headlines in the media and on the internet.
With this epic eleven-year bull market now in the record books, our collective focus has shifted to risk management and the benefits of diversification. While we are aware of the stock market’s excellent record of recovery, investors will need to have faith and show patience. After all, panic selling in the market can lead to dislocation in security prices, until finally setting the stage for the next bull market in stocks.
