Timely and Relevant News: Worldwide Updates and Market Strategies
As the war against COVID-19 wages on, we continue to be inspired by the tremendous bravery shown by healthcare workers on the front lines and those racing to find a vaccine.
Stock Markets Are Adapting
As we adapt to the many changes in our daily lives, stock markets have also had to adapt to the new economic realities. This economic contraction is quite unique—it’s the first one brought on by the closure of non-essential businesses and social distancing restrictions to limit the spread of the virus. It may also prove to be unique by potentially being one of the shortest recessions in history, depending on how quickly the virus can be contained. What is not unique is the challenge for investors in navigating the bear market that’s accompanying this recession.
Insights From Past Recessions
Historically, the best time for many investors to buy stocks has been at the trough (low point) of a recession. The trough point is typically evident in hindsight. Since 1970, bear market low points have occurred within an average of three weeks of the biggest increase in weekly jobless claims. This is a milestone that may have occurred last week.
Some Hopeful News
We’ve received some hopeful news in the battle against COVID-19 over the past few weeks. In Italy, the epicenter of the European outbreak, a peak in new cases likely was reached at the beginning of April and the government has started to plan for a restart of its economy. The epicenter of the US outbreak, New York, is starting to see a slowdown in new cases.
This fight isn’t over and we cannot fully discount another wave of new cases, but the other side of this crisis may be coming into view. The stock market also has started to sense that we’re nearing an inflection point. This is one of the greatest challenges we as Americans have faced. Light is starting to glimmer in the dark tunnel.
We are encouraged that measures are being taken and are having the desired effects. The playbook for investing in bear markets and recessions suggests that we stay the course, consider selectively taking advantage of emerging opportunities where appropriate, and focus on long-term investing objectives.
If you have any specific questions, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up a mutually convenient date/time to speak.
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