Road to recovery
I see four steps that are important.
- A massive response by the Federal government and the Federal Reserve. I think we can check that box. While continued volatility is likely, a modest rebound from March’s low was fueled by the Fed and the $2 trillion stimulus plan.
Other pieces of the recovery puzzle include:
- A peak in new U.S. cases and subsequent decline.
- An effective treatment and vaccine.
- Clarity on the economic data. What will be the steepness and duration of the recession?
No one rings a bell that sounds the all-clear signal. Collectively, markets attempt to price in future events. Given the wide range of outcomes, volatility has been the rule.
But stocks will likely bottom before the economy rebounds.
Thoughts...
I spend an enormous amount of time discussing the importance of your financial plan. It is our roadmap in good times and bad.
It is based on a simple premise: stocks rise more than they fall, and stocks rise more than they fall because historically, the U.S. economy has expanded over time.
I understand that what is happening is unprecedented. We are in the midst of an economic and health care crisis. Both breed fear and uncertainty.
But I am confident this pandemic eventually will pass, and I am confident that the underlying fundamentals of the U.S. economy remain strong. Resilience and ingenuity are part of the DNA that make up America. We will persevere and we will recover.
If you have questions, concerns, fears, and doubt--well, I get that. I really do. And please remember, my door is open. I’m always available.
Andrei Jigalin, CFP®
Financial Advisor
As the great Nick Murray has said, and I quote from memory, “I don’t know which direction the next 20% move in the market will be. But I am absolutely certain about which direction the next 100% move in the market will be.”