Investing during the pandemic

We are all learning to adapt to our new lifestyle now that all of the A&I Financial team members are working at home.

This week, I thought I’d share a few thoughts about equities, discuss one Covid-19 forecast and conclude with what I think all of us can do about it—which is talk with our financial planners about our personal financial plans.

We Americans are pessimistic about Covid-19. By and large, it looks like we expect a few more months of this new normal (1).

2020 04 07 howlongcovid19 002

Investments forecasts
Bear markets usually recover quickly when they are caused by an event like Covid-19! As the following graph illustrates, an event-driven bear market may last, on average, 9 months and take 15 months to recover (2).

2020 04 08 howlongbearmkt 003

The biggest declines have often led to very good gains in the next 12 months (3).

Market moves after crisis 24Mar2020

And, we’ve never quite experienced anything like this pandemic. No one knows how long this crisis will last. McKinsey and Company research is useful and timely. They update it every week. As of April 3, they forecast a few weeks of worsening health numbers and 9 months or more of economic turmoil.

Importantly, the McKinsey forecasts say there is a chance that the economic recovery could be slow. This means we should talk about your personal financial plans. We want to make sure everyone is able to make it through any hard times that may be ahead of us (4).

Read more from McKinsey & Company’s April 3rd Covid-19 Briefing:

As Mitch Zacks says, “the bear market will likely come to an end as the news remains bad and even gets worse” (5). So the investments could recover (and likely will recover) before both the economy and our world health data look good.

Planning is what we can do
This week, it might help to schedule a Zoom meeting, a phone call or an email with your wealth manager. Here are some of the topics we should consider:
• Asset planning forecast
• Income planning forecast
• Budgeting forecast
• Cash planning forecast
• Contingency planning
• Loan planning, incl. mortgages
• Roth conversions
• Beneficiary conversations
• Decision-free zone conversations—you don’t have to make a decision, but you may want to talk!


(1) How Long Do Americans See COVID-19 Disruption Lasting?

(2) Bear Market Recoveries Faster After Adverse Events

(3) Main Management, LLC

(4) McKinsey & Company COVID-19 Briefing

(5) Zacks Investment Management

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