Managing Your Investments During COVID-19
investing-my-money | Read Time: 4 minutes
By Raymond J. McCaffrey, CFA | Published: April 2020
During these unprecedented times it is unsettling to watch the news surrounding the stock market, but it is also important to maintain perspective – history has shown that the market will recover. One of the biggest risks investors face over time is overreacting to events and market volatility, which can negatively impact their savings.
Our advice? Stay the course but consider making some changes to help your portfolio in the long run. Here’s how to proceed:
- Stay Invested and Think Long Term - Market timing is difficult because you must be right twice. Many investors jump out of the market as it is declining but remain fearful as the market turns and moves higher. They never get back in and miss the outsized gains that occur at the start of new bull markets. We don’t know where or when the stock market will bottom, but we know we are closer to the bottom today than we were 30 days ago.
- Rebalance your Portfolio - Hopefully your portfolio owns bonds, especially US Treasury bonds. US Treasuries have the unique feature that they usually go up in price when everything else is going down in price. Now may be a good time to trim some of your bond exposure and add it to stocks, bringing your asset mix of stocks and bonds back into line. Also, international stock markets have fared worse than US markets. Most investors are too heavily invested in their home markets as they don’t realize that over long periods of time (decades) international stock markets do as well as the US market. Now could be an opportunity to increase your exposure to international stock markets.
- Upgrade the Quality of your Portfolio - Whether you buy stocks, mutual funds, or ETFs, today may be an opportune time to upgrade the quality of your portfolio. Focus on stocks or funds that buy high quality companies that are market share leaders in their industry, have strong balance sheets, generate free cash flow, and pay safe and growing dividends. We recommend avoiding companies whose business model may be permanently impaired as a result of the coronavirus. Some companies in the hospitality and travel industries may never recover.
- Don’t Reach for Yield - The old Wall Street adage “more money has been lost reaching for yield than has been lost at the point of a gun” is very true today. In our low interest rate world, if the yield looks too good to be true, it will probably be cut or eliminated soon. Settle for a lower, but possibly safer and growing yield from strongly positioned companies.
About the Author
Raymond J. McCaffrey, CFA
Chief Investment Officer, Managing Director
Ray has over 30 years of investment experience managing institutional, mutual fund and high net worth accounts. He serves as CIO and Managing Director for Cypress Capital Management, a subsidiary of WSFS. Ray graduated, cum laude, from Villanova University in 1985 with a B.S. in Economics. He received an M.B.A. with a concentration in Finance in 1987 from Carnegie Mellon University Tepper School of Business. Ray is a Chartered Financial Analyst (CFA).
This disclaimer informs readers that the views, thoughts, and opinions expressed in the text belong solely to the author and not a recommendation to buy or sell any specific security as well as past performance is no guarantee of future results.
Investment Products: Are Not FDIC Insured | May Lose Value | Are Not Bank Guaranteed
How to Choose the Right Financial Advisor for You
Most Americans believe in managing their own money. While that is ok for some, for others, they may find themselves lost and unprepared for retirement. What often bridges the gap between financial freedom in retirement and those unprepared for life’s financial challenges is an Advisor.Read More
Get More Confident about Investing – Start by Educating Yourself
At some point in everyone’s life, there is usually a reason that prompts you to start investing. Some of the reasons may include establishing an emergency fund, saving for a home, saving for a college education and building retirement funds.Read More
Market Minute: The Latest on the Markets and Economy
The markets and the economy are ever-changing, making it hard to keep up sometimes. Let WSFS help you make sense of it all. Tune in to our Market Minute update from Andrew N. Davis, CFA®, Director of Research at West Capital Management, a subsidiary of WSFS Financial Corporation.Read More
Effects of Asset Inflation Outpacing the Cost of Living
A dollar today does not represent a dollar tomorrow. Inflation is the cause of that fact. Traditional measures of inflation have depicted a lower rate of inflation over the past 20 years. However, measures used by the government agencies are missing other forms of price increases that cannot be ignored and should be considered.Read More
Building Wealth During Different Life Stages
Investing should be viewed as a lifelong process. The earlier you get started, the better off you’ll be in the long run. Whether its saving for retirement, a new house or college tuition, most of us will need to develop a disciplined savings strategy.Read More