Eye of the storm: navigating COVID-19’s crosscurrents

In our 2020 outlook, released in December, we expressed concerns about economic and market vulnerability. Companies, having experienced decelerating profits since 2015, did not have an adequate buffer against risk. Valuations were elevated, forward-looking economic data had grown a bit wobbly, and trade frictions had tested global supply chains. The threat to investment portfolios was that the bull market’s end could come swiftly and without warning.

COVID-19’s spread, or more specifically, efforts to contain the spread, have magnified these market risks. On its own, the financial ramifications of the virus to the U.S. would be serious. Exacerbated by these pre-existing economic weaknesses, it risks creating a chain reaction.

Our instinct is to remain conservative in our investment policy. Despite a global recession, we have yet to witness the hallmark attributes that entice us to take a meaningful overweight in risk assets.

We believe the virus’s path and the effectiveness of policy response to it will define the economic and investment environment from here. That said, any outlook related to the economy, policy, or earnings is going to be highly uncertain. That means we can expect to experience moments of market excitement, as well as periods of profound disappointment.

In times of high market volatility, any deviation from an investor’s strategic benchmark will be acutely felt. Most investors would be best served by staying invested, and avoiding deviations from their long-term goals.

This material represents an assessment of the market environment as at a specific date; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or any particular issuer/security. The strategies discussed are strictly for illustrative and educational purposes and are not a recom-mendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.

Any forward-looking statements are based on a number of assumptions concerning future events and although we believe the sources used are reliable, the information contained in these materials has not been independently verified and its accuracy is not guaranteed. In addition, there is no guarantee that market expectations will be achieved.

This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision. 

“New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. Securities distributed by NYLIFE Distributors LLC, 30 Hudson Street, Jersey City, NJ 07302, a wholly owned subsidiary of New York Life Insurance Company