COVID-19 has done more than affect the health of citizens. It has hurt their portfolios. As the pandemic spread across the world, companies took a hit, lowering share prices and eliminating gains that were made in the market during the recent bear market.
Financial advisors have been greatly affected by the proceedings. As the market drops, so do the portfolios of their clients putting them in a difficult situation.
Advisors have taken different approaches to the situation.
“You cannot be reactive to what is happening. You need to be hands on and proactive,” financial advisor Sandy Dose said.
Dose was ready for what has taken place within the market. Through research she knew that something was going to happen in the market and was able to take action instantly. She sold many shares that her clients held. She has been able to take advantage of the market in this way. Putting capital into stocks that have dropped making larger gains.
Other advisors have taken a different approach such as Nolan Rathe, a financial advisor in Lincoln who tells clients to stay the course and keep calm.
“Our investment strategies are goal oriented so it really won’t change the way we go about investing per se, because the strategies are to be diversified to have exposure in lots of different asset classes and industries to have yourself diversified appropriately and if your long term goal is to see growth, the market will rebound substantially so it doesn’t really change the overall strategy for clients,” he said.
Advisors are not sure when the economy will come back to a pre-COVID-19 state and Dose is concerned about the gains needed to return to the market’s pre COVID-19 standings.
“If you invest $1,000,000, and it drops by 30% to $700,000, it’s going to take more than more than a 40% gain to get back to your original investment,” she said.
The math doesn’t lie, gains will need to be great for the market to bounce back. As for his clients Rathe is not concerned about their current state of affairs and is telling his clients that the current state of the market is an opportunity.
We expect every so often that we are going to have downturns in the market like this so it’s no different than we see in any other downturn, Rathe said. I would say most clients are not going to be affected at all in the sense that this is actually a great buying opportunity,” he said.
Rathe cites former events as reason for clients to remain calm and optimistic as the market bounces back.
“There will be a new normal in the economy in the way that some things go about but there were a lot of changes that came from 2001 when the dotcom bubble burst, there were a lot of changes that came in 2008 from the housing and financial market and there will be changes in our economy from this as well.”