Coronavirus Global Market Update

The Global Markets are seeing a resurgence of volatility due to the increased concerns over the Coronavirus. As February wraps up, the impact of the Coronavirus has spread from an isolated infectious disease issue to a global concern on supply chains and company production. The increase in perceived risk has led to a more than 10% drop during the last trading week in February.

The mainstream media has heightened global investor concerns over the Coronavirus issue on the heels of the vocal CDC issued precautions. We believe it is this heightened concern and the CDC’s efforts to contain the spread of the Coronavirus that has caused the current bottleneck in the supply chains and thus resulting in the current market downturn. Many investors are concerned about the potential for prolonged market declines and conversations around reducing portfolio risk has once again become top of mind for investors of all ages.

At first glance, one would be tempted to sell out of the markets and move to the sidelines. However, during this same time period, positive economic numbers were released supporting the recent market gains through the first half of February. In addition to the recent strong economic fundamentals, the Federal Reserve has also signaled that it is closely monitoring the economic impact of the Coronavirus and is prepared to lower interest rates to stimulate growth when such a move is warranted.

Given the current economic factors, we view the recent market volatility resulting from the Coronavirus scare as a short-term shock to the markets caused by short-term trading behaviors. Once the Coronavirus issue is reigned in and investors re-evaluate the long-term impact, we expect the markets to rebound to fair market values based on true fundamental valuations. While we cannot predict how long the panic in the markets will last, we do believe the current pricing is below fair value.

As we work through this tenuous time, it is important to not panic. Currently, we are maintaining our equity exposure and are continuously monitoring the situation. During this time, we will be rebalancing our portfolios as needed and will take advantage of any tax loss harvesting in our clients’ taxable accounts.

We truly value our relationship and the continued trust that you have placed in us. As always, every decision we make is with your best interest in mind and is fully vetted and deeply rooted in comprehensive analysis and review. If you have any questions, or would like to discuss in further detail, please touch base with us at either info@findec.com or 209–957–7413.