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Are We Done Yet?

Are we done yet?

No, that is not the kids you are dragging with you to the art museum, asking if you are done and can we go get that ice cream cone you promised. 

Actually, this is the pervasive question that every American is asking as we are still on stay- at-home orders across a majority of the country. This year did not start out like we had hoped or like we had planned.  It has been quite a trying time for Americans both personally, physically and financially.

For answers to the initial question, we can look at LPL Research to see if “we are there yet.”

LPL Financial Research has been publishing their Road to Recovery playbook since the beginning of the crisis.  They are following five different signals that they believe will help shine a light on whether or not the market has reached a bottom, as well as a time where the market could possibly turn the corner.

These five market signals are:

1.  Confidence in timing of a peak in new COVID-19 cases

2.  Visibility into the probability and severity of a US recession

3.  Markets have priced in a US recession

4.  Sentiment and technical analysis indicate limited number of sellers remaining

5.  Policy responses have been sufficient to restore confidence

According to LPL Research, Signal #1 can be labeled as “already there” based on the stabilization of new cases in recent weeks, even as testing ramped up. Though another wave of new cases is possible as states reopen, LPL Research believes the peak in daily new cases in the United States established during the second week of April around 34,000 is very likely to hold up.

LPL Research further suggests that Signal #2 and Signal #5 can also be labeled as “already there.” The tremendous and historic job losses have given investors visibility into the severity of a US recession.  The policy response from Washington, DC, and the Federal Reserve have been massive – even can be called unprecedented – and this, too, has helped shore up investor confidence and cushioned the economic blow.

The remaining two signals -- #3 and #4 – they say, can be labeled as “almost there.” The S&P 500 Index is more than 25% off its March 23rd low, stocks are no longer pricing in a recession and are no longer oversold from a technical analysis perspective.

With those signals in mind, what can you do to prepare for the recovery? While this has been a great time to reconnect with family by staying at home, there’s been tremendous strain put upon businesses across the country – from large to small. Small businesses are the lifeblood and the economic engine of our country. It’s important that we continue to do our part to flatten the curve and help eradicate the coronavirus, at least for the time being, so that we can get back to life as ‘normal.’

But, you’re probably asking yourself how bad has this been for me (or my family) financially? Are we still on track to meet our goals or retire? Can we continue to live the life we have been used to for us and for our families? These are all great questions.

First and foremost, take inventory of what investment assets you have.  You need to think deeply about what your investment and retirement goals are.  And importantly, you need to figure out how you’re going to get back on track when you head back to work. It’s still vitally important to continue to save resources toward retirement. 

Revisit what is important to you in terms of retirement. Have desires changed? Have goals changed?  It’s important to have a conversation with those that you were working with to make sure you are on track.  Just because we are in a ‘recession’ and the market has corrected, that doesn’t mean you should put your retirement and income plan in a drawer and forget about it.  The time to review and act is now!

Listen, nobody can predict the future.  If we could, like Marty McFly did in Back to the Future 2, then you wouldn’t be reading this blog and we wouldn’t be writing it. What we do know is that markets move in cycles -- we just ended a decades long bull market cycle of growth – and we can look at the market signals to see when we can possibly get back on track.  It does, however, takes patience, discipline and perseverance to stay on track.

As Sharon’s father used to say, “put your goals in concrete and your plans in sand – because your plans are going to change.”  That couldn’t be a more appropriate statement for what we are all experiencing now.

We are not sure if we are past this pandemic yet, but hopefully we will turn the corner as a country – as a global community -- and get back to the economic prosperity that we were getting accustomed to. The signals tell us where we are from a macro standpoint.  But, remember markets move in cycles and this is just one of many cycles.  We are still on this journey, but haven’t arrived quite yet…

As always, please feel free to share your thoughts, questions and concerns with us.  Take care of yourselves and use this time to plan ahead.  We are here for you!