Like a ferocious storm, the COVID-19 pandemic swamped global economies and markets – and shook investors’ portfolios. With uncertainty still swirling, it’s a wise time to reaffirm, reassess and review.

 

A mighty storm makes landfall

 

The pandemic hit stock markets hard as it touched down on North American soil, bringing in its wake fears of devastating health and economic consequences. Europe was already beginning to demonstrate the awful impact of the virus. Some countries were devastated, others apparently less so. This dichotomy of experiences led to questions over how much impact the pandemic would have globally.

 

So as the coronavirus began to take hold in North America, investors assumed the worst, leading markets to plummet over 35% between their all-time high reached on February 19 and their nadir on March 23.( 1 ) 

 

The storm abates

 

Since March 23, however, global equity markets have soared, with the S&P 500 Index gaining approximately 38%.( 2 )  What turned the tide? Governments and central banks realized that their response to the health crisis – and the lockdowns imposed to deal with it – would need to be massive and unprecedented to prevent an economic depression. To help businesses and individuals weather the storm, they took several measures. They implemented fiscal and monetary policies that slashed borrowing rates. They flooded markets with cheap money. And they also provided massive income support, along with loan, tax and rent relief programs. Combined with a gradually more reasoned analysis of the likely economic impact of the pandemic, markets breathed a sigh of relief, deciding that the future, while still uncertain, was nowhere near as bad as originally feared.

 

With uncertain weather on the horizon, be prepared for any conditions

 

With infection rates still increasing in many areas, including the U.S., we are far from in the clear. While the sharp market rebound proved once again that keeping on course to your plan is the right course of action, today’s calmer conditions provide an opportunity to:

 

1) Reaffirm your goals – Have your goals changed in the last few months? Many investors have reassessed what matters to them in light of the pandemic and its impact, and this should be reflected in their investment plans.

 

2) Reassess your investment plan – If your goals have changed (see #1), then you need to reassess your investment plan. Also, if the pandemic has had a negative financial impact on you, you may need to reassess your timelines to achieving your goals, and/or recalibrate what you have to save to achieve them.

 

3) Review your portfolio – Are the assets in your portfolio performing as expected? Are they still the right choices for the market environment and the likely long economic recovery ahead?

 

While the markets may have weathered COVID-19 for now, there’s still great uncertainty and another storm could be on the horizon. To make sure your portfolio is ready, talk to us today at 604 981 2306.

 

Notes:

1 Return of the S&P 500 Index from February 20 to March 23, inclusive. Return in local currency. Source: RBC Global Asset Management.

2 Return of the S&P 500 Index from March 24 to June 25, inclusive. Return in local currency. Source: RBC Global Asset Management.