"When do I get back into the market?"
That’s a question I hear a lot these days.
My answer is simple:
It depends on your risk tolerance and your timeframes.
Goldman Sachs right now is feeling a little bit more positive. They're saying we've probably hit bottom. Others that I follow are absolutely saying, “No, we've got a long way to go. There's a lot more volatility and a lot more up and down coming.”
To help shore that up, Congress passed measures to provide relief and a kind of stimulus to the country. We’ve had positive responses in the market to the government stimulus. They are absolutely doing things to backstop this in terms of trying to provide money for small businesses through the loan programs.
The Federal Reserve has also done a great job of trying to make liquidity available in the market. They are buying junk bonds or high yield bonds from companies that don’t have the best credit, which have to pay more to buyers to make their bonds attractive.
Buying these bonds is basically a way to backstop the economy and keep these companies afloat. So that tells you how extreme things have gotten.
Looking ahead to the bright side, we should be looking for good economic news, some positive earnings numbers, or a drop in unemployment.
Also, whenever there is a breakthrough on a vaccine, that's going to be huge. The World Health Organization has reported they are about 70 companies or institutions that are working on vaccines right now. A couple of them are already in human trials, one in Beijing, China, one in Hong Kong, and there are a couple in the United States. And people have inquired about these companies. I'm not recommending these companies. But I've had people inquire about them and we can certainly buy those stocks if you're interested in them. But I think there are a lot of risks. Some of these stock prices have already been driven way up because of the speculation. And so if they do not come to market first, if there is negative news, or some of the trials don't work, then those stock prices are going to decline precipitously.
Even though the market will come back up, if this risk is beyond your comfort level, then just focus on your health, your well-being, and getting through this. That's something we are focused on – helping them focus their energies on their health as well as their money.
We've also been working with money managers who use computer algorithms to help them make decisions on shifting a portfolio to cash. We can even put some of these managers into a single statement.
Right now, I've had people feel bad that they're saving into their 401(k) and then they get their statement and it's like all the money they saved is gone. Don't think of it that way. Think that you're at the grocery store. You're buying something, it's on sale and you're getting more of it for this same amount of money. Think of your 401k as you are buying shares, shares of whatever you're investing in. And so you just have more shares. Assuming the market comes back, as it likely will in the long run, you're going to have more shares and you're going to be better off. So do keep saving, if you can.
At Treece Financial, I can walk you through the entire process and help you find the right person to do the right job for you. You can reach me by calling 305-751-8855 or email me at firstname.lastname@example.org.