Asset Planning, Inc Blog

The latest from the team.

Special Update: Coronavirus, Markets and What You Need to Know

Volatility has surged in financial markets, as investors react to the potential economic and earnings fallout from the rapid global spread of the coronavirus. Given what has been historic volatility, we wanted to provide you with a market update that helps to separate fact from fiction and put this market turmoil in the appropriate context.

Over the past month, equity markets have dropped sharply as new cases of the coronavirus burgeon around the world. That is the primary, but not the only, reason for the recent declines. As of this writing, there are just over 200,000 cases of coronavirus worldwide, 100,000 of which are still “active cases.” In the United States, there are approximately 7,000 coronavirus cases.

On March 9, U.S. markets and the economy were dealt another surprise blow, when Saudi Arabia effectively abandoned OPEC-mandated production levels and began to dramatically discount oil prices and increase oil production. The move was in direct response to Russia not agreeing to comply with proposed “OPEC+” production cuts, and essentially, an oil price war broke out between the two countries (Saudi Arabia and Russia) that saw oil futures collapse nearly 25% in a single day.

In the past, low oil and gasoline prices would have been a positive for the U.S. economy, but a lot has changed in the past few years. The U.S. is now the largest oil producer in the world, and the U.S. energy industry is valued at more than $340 billion. With oil prices so low, many U.S. energy firms will have to reduce production and payroll, which will hit both earnings and the economy. This oil price war directly contributed to the markets taking another leg lower during the week ended March 13.

Finally, in the days leading up to this writing (March 18), stocks have dropped even further in response to the extreme social distancing measures being implemented across the country. These measures, which include the cancellation of virtually every major sports season, travel bans from Europe and parts of Asia, the closing of bars and restaurants, the mass instituting of work-from-home practices, school closures, and curfews, are intended to stop the spread of the coronavirus. Yet they also will have a significant and negative economic impact on the travel, leisure, beverage and restaurant industries to name just a few of the segments that will be hardest hit. The cumulative impact of these measures materially increases the chances of a recession in 2020, which is something virtually no one thought possible just six weeks ago.

Positively, the U.S. government is acting to support the economy and that support has ramped up dramatically in the last few weeks. There are two economic supports bills that are currently making their way through Congress and a third has already become law. Each is designed to help a portion of our population bridge the economic gap until the spread of the virus peaks and begins to decline.

The Federal Reserve, meanwhile, has cut interest rates to zero percent to help the economy. The Fed also has implemented several important measures to provide short-term cash for corporations and to ensure there’s plenty of capital for the broader banking system. Those measures are working to help keep the banking and financial systems functioning in an orderly manner.

Yet despite this support, which is an important economic positive, the world understandably looks very scary to many people right now.

Across the nation, and the world, roads are mostly empty, office buildings are vacant, schools are closed and normal life as we have known it has largely shut down. Yet it’s important to remember that this historic market volatility, along with these societal disruptions, are temporary. At some point, the spread of the virus will peak and begin to recede.

Similarly, these social distancing measures, while unsettling, are also only temporary. Our children will once again return to school and adults will return to work. Air travel will resume, cruise ships will set sail again, and the U.S. economy, which is by far the most flexible and resilient in the world, will recover.

Over the past several weeks, we’ve witnessed near panic, both in regular society as well as financial markets. But as we all know, the worst thing to do during a panic is to panic. That’s because panic leads to hasty, short-term decisions that jeopardize your long-term best interests.  

Meanwhile, shares of some of the most-profitable, well-run companies in the world are now trading at substantial discounts to levels of just a month ago, and history has shown us that over the longer term, these tumultuous episodes can create fantastic investment opportunities, and some of the most ideal buying conditions the market can offer.

As has been said many times over the past few weeks, we are all in this together. That’s why we remain committed to helping you navigate this difficult environment—and always maintain the primary goal of ensuring you achieve your long-term financial objectives.

Continue reading
  1625 Hits

Search Blogs Module

Wait a minute, while we are rendering the calendar
card reader Orange County identity theft 20 year anniversary privacy settings check lists April 18 2017. relief efforts retirement planning ID card Wells Fargo employees vacation breach cell phone service provider cell phones account numbers interest stimulus package Erin Nelsen integral member settlement options estate planning tax deadlines Expired medications insurance policy media accounts official certification 401K earnings fallout home fees Healthcare Affordable Care Act Coronavirus Aid phishing sites phone companies Federal Trade Commission website pets increase https ://seekingalpha earthquake app Two-Step Verification cell phone carriers padlock retirement plans Part B emergency folder FSA president Trump opt-out Victor Dergunov CA FTB payments chip-enabled EMV cards markets clients show support asset Planning trustee Medicare Advantage fun facts July weekend Open House clients California Lions Friends Labor Day Flexible Spending Account Wells Fargo customers news coverage September 30 2020. Supplemental Security Income emergency kits “ skimmer ”. team members pet Treasury Department FEMA website credit freeze emergency kit 70 1/2. cell phone provider 4 pm -8pm Independence Day health care costs driver license partner /owner cell phone SIM swap scam tax season estate paper records July 4 disaster areas D premiums company vision screening text messages credit monitoring service July 6 birth certificates pet donation drive Fox News story June 29 information life saver car loans ice cream money parking spots email notifications jury duty Medicare Part B premiums records investment statements portal wells Fargo people medications banking Amazon Open Enrollment documents interest rates 900 number TD Ameritrade flash drive scams National Ice Cream month spread tax filing deadlines items credit score DNA test kits policy credit card fraud client portal Financial Planning Magazine business hours September 9 drive /usb retirement April 15 Kiplinger Letter assets Social Security EEChecklist-Kits.pdf stockpilingchecklist.pdf gap insurance tax records executive order home mortgages home emergency kit IRS 2017 IRA contributions web address phishing scams toilet paper Mobile Banking Security Tips Shred paperwork tax deadline clone counterfeits April 11 illiegal robocallers non-prescripstion sunglasses January 10 memorial Day weekend estate planning direction market turmoil Medicare question Brexit vote hurricane Dorian trust paperwork clutter self-help topics insurance policies July 3 rd operations manager 2018 IRA contributions 2017 TD Ameritrade National LINC Conference October 1 2020. Auto insurance IRS deadline Puerto Rico COVID -19 virus February 14 contribution limit Medicare Part B privacy notices house sitter 23 andme summer Joey Gonzales Retirement Contribution Limits IRA accounts consumer spending Social Security Administration home break-ins app holidays approach donation counts home emergency preparedness kits spam phone Orange County Superior Court Medicare plan Ice Cream Social Legal robocalls bottom line notary services borrowing money Charles Schwab years Economic Security ice cream event water … stock pile VOIP landline phones student loans retirement accounts prescription eyeglasses spring cleaning offering insurance Notary Public tax returns checklists Part D premiums . September 8 CERTIFIED FINANCIAL PLANNER exam blog post Roth IRA 2017 Equifax breach phone cell phone carriers offer fun atmosphere pet industry pet supplies Kraig Mathias coronavirus Asset Planning identity thieves CARES Act CFP ® health care services credit cards home security Facebook profile credit card company family members information Facebook Medicare debt rescue organizations donation items https ://