The uncertainty surrounding the spread of the Covid-19 coronavirus has caused an increase in volatility in the markets. For those of you positioned more heavily in equities, you’ve probably seen drops in your 401(k) account values that haven’t occurred since the mortgage crisis of 2008. Due to these rapid changes, the 401K team at Sequoia has seen an increase in inquiries asking what to do about investment allocations. “Why is my account going down?” or “Should I change my investments?” We thought maybe it would be helpful to you to hear some perspective as you evaluate your holdings and what actions you may consider:

Why do stocks go down when there are significant societal events like the coronavirus?
Generally, when there are more sellers than buyers stock values go down. Uncertainty is a big factor that traditionally causes investors to sell. What is hard to predict is how long investors will continue selling, driving stock prices down, and when a bottom will be reached. Trying to time these events can be very tricky. Negative news typically drives prices lower. The challenge for the investor is not knowing when negative or positive news will be released. Additionally, investors seek to anticipate reversals and invest ahead of a trend.

Should I change my investments?
For those attempting to “time” the market and anticipate its direction, be careful. Big moves may often happen during aftermarket hours, on weekends, or when you are not expecting a turnaround.
For those considering not making any changes, there is historical precedence for market corrections occurring and the market rebounding.

Final thoughts?
Once there is a better understanding of the coronavirus and the uncertainty is reduced, experts anticipate the markets will recover. When that will happen is unknown and until it does, the markets may continue to be volatile. Until then, evaluate your long-term goals and strategy before making any short-term changes.

For some additional perspective, here are some additional resources for your consideration:
• a short market bulletin update from our broker/dealer, Pensionmark; and
• a short video made by Columbia Threadneedle where Colin Moore, Global Chief Investment Officer, discusses the economic impacts of coronavirus as a temporary phenomenon. Coronavirus: Investing Wisely in a Time of Uncertainty

Luciano Costantini – Principal & Director of 401(k) Services at Sequoia Consulting Group, helping companies help employees save for retirement. When not training for marathons and triathlons, he can be found icing his hamstrings and quietly whimpering in pain.

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC). Pensionmark Financial Group, LLC/Pensionmark Securities, LLC and Sequoia Consulting Group are non-affiliated entities.