Watch the CPK Market Action Report: April 2020
Cash is king as state and local governments around the country shut down to prevent further spreading of the Coronavirus. So, where should you be invested and how will you know when to get back into the market?
Watch the full 3-minute Market Action Report now:
April 2020
The spread of COVID-19 sent stocks tumbling in March, as health and economic costs of the pandemic began to mount.
The Dow Industrials lost nearly 14 percent, while the S&P 500 dropped 12.5 percent. The NASDAQ Compose fell slightly over 10 percent.[i]
Stocks moved sharply lower early in the month, as investors grappled a string of troubling headlines.
On March 15, the Federal Reserve cut interest rates to zero and announced several actions designed to support households and businesses. However, markets were unfazed by the Fed’s aggressive move, electing to instead focus on the contraction of economic growth that many are expecting.
As prices fell, the hospitality, real estate, and travel industries felt the immediate impact of the newly instituted social distancing rules. At the same time, financial stocks suffered losses on lower interest rates, while energy prices sunk to new lows in part due to lower oil prices.[ii]
In the weeks to come, investors will be closely watching the status of new cases of COVID-19.
Investors are also expected to watch fresh economic data that may provide some insight into the current level of economic activity. One example may be the weekly jobless claims for unemployment insurance, which could provide a preview of the overall health of the labor market in advance of the monthly jobs report.
Throughout the month, companies will be preparing their financials to report on first-quarter earnings. The reports may provide more information about how deeply firms have been impacted by the overall economic slowdown.
So, for the month of April, all of my models are 100% Cash. I noted in last month’s video that I was moving in this direction and around the second week of the month, I went to 100% cash avoiding pretty much all of the major decline.
At some point, I will look to re-enter the markets. As for right now, I am comfortable sitting on the sidelines. Let me be clear, the decision to reinvest should not be nor is it a gut feeling based on a couple of big up days in the market. My indicators do not have emotions that can sway them away from doing the right thing. They are rules based and will flip back on giving us the green light to begin reinvesting when an upward trend starts to emerge and has some legs to it. THAT is when I will begin to add exposure back into equities.
My current allocation is not a recommendation. I expect heavy volatility to continue for some time. Successful navigation through this environment will definitely require a fluid plan with all hands-on deck.
Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.
If you don’t have a plan OR you’re not comfortable with the plan you have, call me today to get pointed in the right direction.
I’m Chad Kunc and that puts a wrap on the April 2020 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.
And that action starts, NOW!
Toll-Free: (866) 521-7526
SOURCES:
[i] The Wall Street Journal, March 31, 2020. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite index is an unmanaged index that is considered representative of the overall U.S. stock market. The Nasdaq Composite index is an unmanaged index that is considered representative of small-capitalization companies. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
[ii] The Wall Street Journal, March 27, 2020