Fundamentals Undergird the Markets

Fundamentals Undergird the Markets

| March 13, 2020

Andy Puzder's recent Op Ed made the following excellent points that all investors should remember.

While the coronavirus pandemic is a medical crisis, President Trump pointed out that it “is not a financial crisis.”

That’s a crucial point we should all remember. This pandemic is unlike the savings and loan crisis of the late 1970s, the tech bubble in the late 1990s, or the real estate bubble of 2007. Our nation’s economic fundamentals are strong.

There is no underlying economic fault that must be corrected before our economy can recover. As the president noted, “our banks and financial institutions are fully capitalized and incredibly strong.”

Unemployment is consistently at 50-year lows and we have 1 million more job openings than people unemployed. The Atlanta Federal Reserve’s GDPNow forecasting model is projecting 3.1 percent gross domestic product growth for the first quarter of this year, with only three weeks left in the quarter.

When the coronavirus pandemic subsides – and it will – our economy and the financial markets will come roaring back.

As long term investors, let's keep our focus on the investment landscape AFTER the COVID-19 panic. Selling investments at fire-sale prices has never helped a long term investor achieve financial success. However, buying at fire-sale prices has changed lives for some. To this end, client portfolios are being re-balanced to take advantage of opportunities for whom they're appropriate.

Remain confident that the investments you own are still owned by you. The only change is a temporary one: their current price. History has shown that prices always recover after bear markets. Rest easy in this knowledge.