Our View On The Markets? Stunning.
The speed and magnitude of the equity-market decline have been record-setting. Fixed-income markets have frozen; bonds aren’t selling at a reasonable price and there are almost no serious buyers. Our view on the markets? Stunning. It looks ugly. Investors have been stunned and are responding with panic (even some long-term investors who should know better). This is an understandable reaction. It is often said that financial markets hate uncertainty. Investor behavior during this type of environment demonstrates this point.
Information Vacuum —
or Information Overload?
Investors have been looking for signs, seeking information, reading the news obsessively and — due to the enforced confinement taking place in many parts of the world — watching it day and night on television. Traffic on MarketWatch.com, for example, increased by 269% from the second half of February to the first half of March (1).
But the pace of change — market movements, virus spread and government response — has been so rapid that news is literally out of date nearly as soon as it comes out. What does this mean? And most importantly, what should you do?
The Truth: The Pros are Doing Almost Nothing Differently
The investment professionals at SEI are not frantically trading in an attempt to shelter assets, time the markets or call the bottom.
Instead, we’re striving to conduct business in an orderly fashion in a disorderly world. We expect the chaos to continue until coordinated government action helps restore smooth operations in the fixed-income markets and investors can intelligently value equities again. We’re not there yet, and we expect that it may take some time to get there.
In the Meantime
If you are a goals-based investor — and your portfolio is aligned with your goals, time horizon and risk tolerance — be patient. Time should be on your side.
If your portfolio was not aligned with your goals as the selloff began, we think it’s too late to sell now. Doing so may mean you’ll risk missing the rebound that will inevitably happen. No one — including those of us in the financial-services industry — knows exactly when that will take place. But we are confident that the markets will eventually have their comebacks. It may take several weeks — or even several months — but order will be restored.
Until then, what should you do? Read, watch, listen and learn. Use this experience to become a better, more informed investor. We will continue to monitor economic and financial-market developments and provide our insight to help you in meeting this goal.
1 “Financial Services B2B Category & The Impact of COVID-19.” March 19, 2020. Ptarmigan Media
There are risks involved with investing, including loss of principal.
This material is provided by SEI Investments Management Corporation (SIMC) for educational purposes only and is not meant to be investment advice. The reader should consult with his/her financial advisor for more information. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results.
This is an article originally published by SEI in the Knowledge Center.
Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.