Weekly Client Update March 27th, 2020
To Our Valued Clients and Friends,
March has turned the entire world upside down as the global economy came to a grinding halt as the result of the containment efforts of COVID-19. People’s lives have been impacted both physically, mentally, emotionally, and financially. Schools have shut down and restaurants and bars have closed due to the shelter-in-place orders implemented across the globe.
The first two weeks of March spared nothing short of panic and fear as investors white-knuckled the intense free-fall in the markets. For days worry spread faster than the COVID-19 virus with no end in sight. Small businesses began suffering, layoffs started, and travel plans were cancelled. All this led to a decline of over 30% in the equity markets from their recent February highs.
As March continued on, the Federal Reserve and Foreign Central Banks across the world started providing stimulus packages to keep the financial markets afloat and liquid. Specifically, the Fed has infused billions of dollars into the US banking system to ensure liquidity, announced an aggressive asset buying program of historic measures, and pushed the tax filing deadline out to July 15th. Additionally, the Fed has stated that they stand ready to do “whatever it takes” to ensure the viability of the US economy as the US Government strives to work out a stimulus package of more than $1.5 Trillion for Americans.
At first, the markets reacted negatively to the various Fed intervention measures. However, the markets started rebounding once the discussions of the stimulus package hit the mainstream media. As we currently stand at the end of March, the markets have rebounded over 20% from their March lows and the stimulus package is nearing the finish line for signing.
While there will undoubtedly be short-term disruption to small businesses and certain industries, we believe the markets will continue to rebound as the containment efforts for COVID-19 shows progression and the stimulus bill gets approved. We will provide a summary of the provisions contained in the proposed stimulus package once it is enacted.
In the meantime, we look for opportunities that present themselves as a result of current circumstances. Over the past week, we have been actively harvesting losses in our clients’ accounts and rebalancing our portfolios. As you review your financial picture, consider the potential benefits of re-financing your home mortgage given the current low interest rates and evaluate the tax impact and benefits of Roth conversions as we endure lower market values. If you have not already done so, now is the time to review your cash flow needs, along with your lifetime withdrawal strategy, and adjust your budget accordingly. Most importantly of all, stay calm and remain focused on your goals. Do not let knee-jerk emotional reactions to short-term market fluctuations derail your longer-term dreams.
Our hearts go out to those impacted by COVID-19 and our thoughts and prayers are with those who have tested positive for the virus. At FinDec, we want you to know that no matter the ups and downs of the market and economy, or in times of crisis, we are here for you every step of the way. Thank you for your utmost trust in us and we encourage you to continue to Grow with FinDec. If you have any questions, or would like to explore some of the mentioned opportunities, please reach out to us at info@findec.com or via phone at 209–957–7413.
