From Dalsey Lambley, Edward Jones Financial Advisor
In today's challenging times, Edward Jones financial advisors are thinking about the health of their clients, their families and their colleagues, what's happening in their communities and the effect of Covid-19 on the markets.
Local Financial Advisors Dalsey Lambley & Rich Otto are taking steps to protect the health and well-being of clients, associates, families and communities. To help mitigate this crisis, they are suspending face-to-face visits with clients, holding virtual meetings and training sessions and ensuring office spaces are sanitized and disinfected.
Of course, people's financial situations also weigh on their minds. the current market selloff is certainly concerning, but it seems to be driven more by fear and panic than by economic or financial reality.
Monetary and fiscal policy are necessary, but at the end of the day, it will be the medical progress that will dictate the timeline for reducing market volatility and the ultimate rebound in stocks.
Edward Jones expects daily volatility to persist until new virus cases begin to slow, but investors should find optimism in these facts: prior to the epidemic, unemployment was near a 50-year low, with solid wage growth; there was an uptick in the housing market, which may accelerate due to declining mortgage rates; and the Federal Reserve has cut short-term interest rates back to near 0 percent.
Furthermore, the drop in investment prices may indicate that the financial markets have already "priced in" the likelihood of a short-term recession. This could mean that investors have already endured much of the stock market pain. Yet, even a short recession is of concern since it's likely to bring at least a temporary disruption to an otherwise strong labor market.
For investors wondering what to do now, Dalsey and Rich offer these suggestions:
First, remember why you're investing. With the market decline, people will be tempted to change their investment strategies. But they need to keep in mind that most of their financial goals, such as a comfortable retirement are long-term in nature - a lot longer-term than the shelf life of the coronavirus. If investors have established a long-term strategy that's appropriate for their needs, they should stick with it regardless of today's headlines.
However, individuals who are particularly concerned over the current results of their investment statements might want to evaluate their risk tolerance. For those who may be losing sleep over what is going on in the markets, it is possible the portfolio is positioned too aggressively for the amount of risk that feels comfortable. In that case, investors are advised to work with their financial advisor to consider adjusting the investment mix to include more fixed-income securities, which can provide some downside protection; but there is a trade-off because this might be affecting long-term growth potential.
Finally, now might actually be a good time for investors to consider actually adding to their portfolios. Right now, many stocks are at their best values in more than a decade. For those needing to rebalance a portfolio, this could be a good time to do so.
Ultimately, investors need to realize that, while these are somewhat uncharted times, the temptation to panic should be fought. Emotions are running high right now, and while everyone's top priority should be to protect themselves, their families and their communities, it is still important not to lose sight of their financial well-being. For that, the best thing to do is look past short-term downturns and maintain the discipline to keep investing in all types of markets.
Edward Jones, a Fortune 500 company headquartered in St. Louis, provides financial services in the U.S. and, through its affiliate, in Canada. Every aspect of the firm's business, from the investments its financial advisors offer to the location of its branch offices, caters to individual investors. The firm's 18,000-plus financial advisors serve more than 7 million clients and care for $1 trillion in assets under management. Visit our website at edwardjones.com and recruiting website at careers.edwardjones.com. Member SIPC.