There’s no escaping the impact of the COVID-19 pandemic. Even the tone of commercials has shifted, with many companies taking this time to highlight the steps they’re taking to protect employees or support public health efforts. And for business owners who are living and breathing the real-world effects of this pandemic, trying to tune out excess COVID-19 noise and navigate a workable future can seem like a tremendous ask.
So instead of fighting this wave, ride it. Learn how business owners and investors can transform this unprecedented period into a more sustainable economic future.
Be Prepared to Pivot
Within the span of a few days, Congress created, debated, and voted on an economic stimulus package to allow businesses to apply for forgivable loans and federal grants. But just a couple of weeks after the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs) were signed into law, their coffers ran dry. Upon this announcement, some lenders revealed they still had hundreds of thousands of applications waiting for approval in a “first come, first served” process. Unfortunately, business owners that weren’t able to put together an application package quickly enough were left behind.
This shows that during these unprecedented times, it’s crucial to be able to pivot quickly to take advantage of fleeting opportunities.
Furthermore, taking a proactive approach in both your business and your investment portfolio can provide some much-needed flexibility. For our clients at Penta Wealth Management, this can mean shifting into a more defensive strategy in anticipation of an increase in unemployment claims or adding some volatility hedges to help maintain portfolio income while stock values are swinging.
Though it’s important to take a long-term perspective on one’s investments, this doesn’t mean that a “set it and forget it” approach is the best way to handle every economic hiccup; and here at PWM, we carefully watch economic indicators to make well-informed, data-driven decisions on our clients’ behalf. For instance, the recent 8.4 percent drop in retail sales or the nearly 5 percent GDP contraction during the first quarter of 2020 indicate that, while the COVID-19 curve may be flattening, its effects on the U.S. and global economies may be felt for some time. This can provide a prime buying opportunity for some companies that are well-positioned to profit from an economic recovery or provide a signal to sell stocks that are on more precarious ground.
Focus on the Long Term
With headlines like “Dow Records Biggest One-Day Drop in History,” it’s tough not to worry about the future of your investments. But these historic drops (and gains) are made possible only by the historic valuations of the major stock indexes. Even as recently as the months preceding the Great Recession, the Dow was trading around the 11,000 range; yet on March 23, 2020, at the height of the COVID-19 pandemic, it barely cracked 18,500 before heading back above 20,000. Over the past decade, a 1,000-point drop in a day has transformed from a devastating correction into the type of fluctuation commonly seen in a day of vigorous trading.
The same principle holds for other major indices. Take a look at an expanded view of any historic stock chart to see that the long-term trend remains consistently upward over time. Market volatility that can seem endless while you’re in the midst of it is nothing more than a minor stumble in the marathon of investing.
This outlook can also provide some perspective for those who are tempted to try to time the market. Remember, successful market timing requires you to be right twice—not only knowing when to get out to avoid steep losses but when to buy back in to capture gains. For most investors, efforts at market timing are driven by fear, not fundamentals. And this is understandable—watching dollars evaporate the moment the market opens for the day can be panic-inducing. But by stepping back, determining whether your asset allocation still meets your needs and goals, and then avoiding any rash decisions, you’ll be able to continue with confidence.
After all, if the S&P 500 will be over 4,000 by the time you retire, will it really matter whether you bought in at 2,500 or 2,700?
Consider a Permanent Shift to Online Sales and Service
For many businesses, this pandemic has rapidly accelerated what once was a gradual shift to online offerings. But while a quick move to e-commerce rarely comes without some growing pains, business owners may want to consider maintaining a robust online presence as the “new normal” even after shelter-in-place orders are lifted. Many consumers who once preferred browsing products in-store or visiting a service provider in person are seeing, for the first time, the many benefits that can be realized by taking these interactions online.
Not only can making this permanent shift online expand one’s customer base, but it can also save money. Recent retail bankruptcies have largely concentrated around stores that boast an expansive (and expensive) physical footprint, while e-commerce retailers like Amazon have posted record profits during the COVID-19 lockdown. By using this time to assess which of your business’s expenses are no longer necessary in a post-COVID world and making substitutions where appropriate, you’ll be able to exit the pandemic with a more streamlined and cost-effective approach to doing business.
Why You Need a Second Opinion
Managing through adversity can look different for everyone and supporting a large portfolio during a financial downturn is quite different than the activities and strategies your advisor is accustomed to putting forth when the economy is steady. It’s vital to your long-term financial health and well-being to validate that you’re taking advantage of all opportunities to safeguard your business or personal portfolio, particularly in times of economic uncertainty. If you already have a roadmap in place to assure your goals are met over time, work with a financial advisor or wealth planner to fine-tune your current path and results. Having that second opinion may confirm exactly what your current financial advisor is recommending…or it might just open your eyes to a hidden possibility that you didn’t expect.
What to Expect From a Second Opinion Service
From discovery to execution, a full-service financial planning partnership is focused squarely on you. We start by understanding where you are and where you want to go. Then, we work with you to create the kind of plan that is positioned to meet those goals. Unfortunately, not all financial planners take that approach. That’s why Penta Wealth Management offers a Second Opinion Service.
We’ll meet with you to talk through your concerns and then take a deep dive into your financial plan to see if it is designed to support your vision. We’ll look at portfolio investment strategies, diversification, and investment vehicles. Hopefully, the outcome of our second opinion conversations is a confirmation that your current investment strategy is in-line with your values and goals. If not, we will offer recommendations on how best to optimize your wealth over time while staying within your parameters. Sometimes, you may find that the second opinion service uncovers some simple additional tasks to shore up the plan or significant opportunities to elevate your investment strategy. If your current strategy is off-base, we will suggest ways in which we can help. No matter the outcome, you’ll receive a total client profile and a personalized analysis of your current situation.
Our complimentary Second Opinion Service is a no obligation, fresh perspective of your current investment strategy giving you peace of mind or actionable steps to optimize your financial future. Contact the team at Penta Wealth Management at 888-447-3682 or via email to info@pentawm.com to schedule your complimentary second opinion review today.
