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The Latest Coronavirus Impacts & Planning Opportunities

| March 16, 2020



Coronavirus: Considerations in Light of the Newest Global Health Pandemic

Matthew Carbray, CFP®, ChFC®, CLU®


I am sure by now you have been inundated with the media coverage of the Coronavirus, or COVID-19 as it is known in the medical community.  It has been, and will likely continue to be, a period of great uncertainty and uneasiness for all of us as individuals.  As I write this commentary, I am currently over 30,000 feet in the sky travelling back from a family vacation in Orlando.  Surprisingly the airports, resorts, and theme parks showed no sign of concern over the past week.  The spread of COVID-19 is unquestionably a serious concern, but do we expect to even come close to the deaths experienced annually that are attributable to the flu?  Life will return to its normal form but a lot will have to do with the perceived response.

I do not proclaim to be an expert in infectious disease nor do I have the medical credentials to formulate a prognostication on just how widespread this virus will be at its peak, but what is encouraging is the number of people succumbing to the virus relative to those who have tested positive.  Unfortunately, yet absolutely necessary, the actions that have been taken nationally and internationally have completely disrupted the global supply chain.  If you were unsure how dependent we are on other nations throughout the world, this should confirm that we are in fact interconnected.  China makes up a significant amount of the world’s gross domestic product and that was very apparent when the coronavirus was detected.  Interestingly enough it would appear that China is gradually coming back online in manufacturing and their citizens are returning to some semblance of normal life.  Just how far are we behind with the virus spread plateauing?  I don’t think anyone knows, but if China is our guide it may not be the 3-6 months being estimated by some medical outlets.

Our economy recently has been driven by a strong consumer.  Think about low unemployment, improvements in the consumer’s balance sheet (buoyed by low interest rates, higher real estate values relative to recession levels, lower revolving credit card debt per individual), and above inflation wage growth as key economic indicators over the past few years.  As consumers grow fearful of widespread contagion, their buying behavior is clearly being curtailed or eliminated outside of consumer staples.  Good luck trying to find disinfectants, antibacterial soap, or toilet paper in the stores…I know I can’t wrap my head around why toilet paper is so scarce either!  If you want to take a trip that involves travel in a confined place, good luck finding an option still open.  Now let’s take that further to gain some economic perspective…if you can’t get on a plane to take a trip to Disney World because the parks are shut down, what happens to the employees, the local businesses who cater to Disney, and the suppliers who sell to Disney?  How about the airline operators and the supply chain that supports them?  The answer is the need for mass lay-offs or government intervention to stabilize the economy.  I am of the opinion that government fiscal policy coupled with Federal Reserve monetary policy will be significant.  I expect interest rates to go down somewhere between 0.50 and 1% at the next Federal Reserve meeting and government action to help borrowers of student loans and mortgages.  Expect significant temporary tax reform and government stimulus to failing industries that employ hundreds of thousands of US workers.  I also believe private enterprise will join in with the government in partnership to provide accelerated response to the need to expand testing and develop vaccinations.  Don’t be surprised if you pull into Walmart to be tested in a parking lot with an immediate test result given on the spot.  This is an “all hands on deck” situation and I am confident the response will be aggressive.  I have unwavering confidence in our country to do what is right.


So, what does this all mean, financially speaking specific to your planning?  The answer is going to be very personal, much in the way that our practice is structured to provide personalized financial planning advice to each of our clients.  For those of you who are still in the accumulation phase for a particular goal (retirement, kid’s college, charitable endeavors) it very well may mean that you look to rebalance your portfolio to take advantage of stock prices off anywhere between 15 and 20% from the peak.  If you have a diversified portfolio of stocks and bonds it is very likely that your original target allocation is out of sorts relative to the current composition.  A common investor portfolio of 60% stock and 40% bond or fixed income may now look like 52% stock and 48% fixed income because stocks have gone down at a much higher level than most forms of fixed income.  By selling off some of the bonds and reinvesting into stocks it could present a good longer-term buying opportunity.  It also may be advisable to fund retirement, H.S.A. and college savings accounts now instead of waiting until the end of the year given the sharp sell-off if possible.

Most of the concerns we have heard from clients are those who are approaching or in the distribution phase.  You have accumulated a lifetime’s worth of retirement savings and now you are dependent on the future growth and income produced from the portfolio to meet your life’s goals and intentions.  The ability and temperament to ride out periods of volatility has waned for most and we completely understand.  I don’t want to speak broadly about steps that you should consider taking right now, but what I do want to encourage you to do is to schedule an appointment with us.  Let us run a financial plan revision and let’s discuss some proactive short and long-term action steps to strengthen the prospects of achieving your stated goals.  I continue to believe in the strength of our economy and the resiliency of our country.  We are a country of innovation, and much as we have faced global health pandemics in the past, I am confident that we will look back at this as nothing more than a temporary reset of global markets.


Rebalancing assets can have tax consequences. If you sell assets in a taxable account you may have to pay tax on any gain resulting from the sale. Please consult your tax advisor.

Using diversification as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions.


The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.