COVID-19's Impact and the Way Forward

As several broad-based U.S. cap-weighted equity benchmarks and aggregate bond indexes are near or above their all-time highs, COVID-19 continues to spread and millions of people are still out of work or under-employed. Unprecedented fiscal and monetary stimulus programs have helped put dollars in consumer’s wallets and benefited investors, but the stock market is not the economy and enthusiasm for more stimulus programs perceived to benefit wealthier investors is waning. COVID-19 has not only demonstrated the necessity of preparing for similar future threats, but also how a widening inequality gap can be exacerbated in times of crisis.

While what our society is experiencing is unprecedented (when did we ever use this word so much?), we can look to the past for some guidance and we can trek a new path for positive change.

This month is the anniversary of the 2008 financial crisis. We can find some comfort in remembering and reminding our clients that our economy recovered to pre-crisis levels then and we can do so again. Then and today, recovery is strongly influenced by the Fed and Central Banks.

Unfortunately, governments’ influence these last 12 years has made investors assume their continued, almost perpetual support. This seems to be making investors too optimistic for the future, along with the hope that a vaccine will quickly be discovered and return everything back to normal. But there are a lot of uncertainties in the economy (political tensions, massive national debt, the demise of some companies and sectors) and the inequality gap will not miraculously close.

COVID-19 has finally placed a bright spotlight on inequality; it has clear, dire consequences to people’s lives. Since 2008, inequality has continued to widen. It is a systemic issue with a high social and financial cost. While more and more investors are changing their investing to be more values aligned, COVID-19 and recent social unrest has revealed that inequality must be dealt with now and in a collaborative and comprehensive manner between the private and public sectors.

These past 6 months have been traumatic for many of us. It’s only natural in our present state to feel unsure of what’s ahead. I still believe that the best way forward is to focus on what we can control.

Diversification: The best remedy to sleep at night and not worry about your portfolios is having well-diversified portfolios at acceptable risk levels.

Market Volatility: Market swings are inevitable but there’s not a magic ball to predict them. It’s important to stay the course and focus on the long-term. The most recent reminder that you can’t time the market is hearing how some investors pulled out of the market in March and missed the rebound. It bears repeating: markets prices can move swiftly up and down, and it’s impossible to time the market.

Participate in closing the gap: We all can do something to improve conditions for those who struggle. There’s so much we can do, big and small. Helping mission critical centers such as food banks, providing masks and school supplies, and using your voice to push for change. We at Toroso have taken this to heart and are actively giving back to our communities.

And finally, reach out to us when you, your friends, neighbors, or anyone you know need help. It’s our mission to help people achieve their personal and professional goals in a way that is tailored to their unique needs. We are here to partner with anyone, no matter the market conditions, and help them reach their goals.

Amidst the uncertain world around us, medical science will prevail and markets will recover. And I truly believe that when we all come together to help one another and decision makers place equality of opportunities at the top of their agenda, there’s nothing we can’t do. I am confident that these tough times will pass and we will emerge stronger than before.

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Toroso does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Investing involves risk; principal loss is possible. ETFs seek to generally track the investment results of an index; however, the ETF may underperform, outperform or be more volatile than the referenced index.