Timely & Relevant News: Market Drop May Create Opportunities for Investors
Market pull backs are not all bad. Many investors view lower stock prices as buying opportunities. Additionally, as interest rates continue to drop; this creates opportunities to re-finance a mortgage or other large loan.
Federal Reserve Chairman, Jerome Powell stated that, "The fundamentals of the U.S. economy remain strong. The coronavirus poses evolving risks to the economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act appropriate to support the economy."
Burt White, Managing Director, Chief Investment Officer for LPL Financial stated that, "Our basic belief is that any economic disruptions in the U.S. may be modest and short-lived. We think domestic efforts to contain the virus will be more successful and have less economic disruption than China."
Ongoing efforts are being made to contain the virus. Relative to the time-frame, we are starting to see the number of total cases plateau as shown in the graphic below from worldometers.
Key manufacturing provinces, such as Guangdong, Jiangsu and Zhejiang (which together account for 27% of China’s GDP and 55% of China’s exports), have seen new infection numbers come down significantly.
Perspective is crucial during times like these. So how far have the markets really dropped?
Randy Eveland, Wealth Advisor at Covenant Wealth Strategies and investment committee member stated, "the markets are revisiting where they were last fall, which is still a positive place compared to previous years."
Corrections of 10 to 15% are common. They typically happen approximately every 12-18 months. Last time the markets experienced a pull back was in December 2018 and they snapped back.
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