The spread of Coronavirus is putting its mark on the world’s capital markets this morning. Global Stocks and US Futures are down 2% to 3.5%, oil and other economic commodities are having significant declines as well. Bonds prices are up (yields down) via a flood of monies seeking safety.
The 2020 calendar year returns for most investment portfolios are likely back to 0% gain for the year. This may be a clearing event for some of the optimism we have just enjoyed from the 2019 banner year in every asset class. Markets never move in straight lines and seem to take sharp turns on purpose, just to “throw off” investors from the roller coaster (see chart for the past 10 years >> notice the short-term decline of the Ebola Virus in 2014).
In today’s low, low interest rate environment, there are very little opportunities in “safe money”! Timing or trading the market is always challenging and comes with the risks of forgoing future returns and the costs of owing taxes from capital gains.
MCF Clients that are withdrawing from their portfolio (individuals, pension plans, and endowments) have been positioned to have 7 to 10 years of annual liquidity within the portfolio to withstand these sudden shocks. As you know, the construction of your investment policy is aligned with your cash flow plans, to withstand these turbulent times.
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