• Besides amassing monetary gains, the investment portfolio is driven by financial goals and objectives. Explicit goals and objectives can be organized in a personal financial plan, then, assessed to review progress of achieving desired outcomes overtime (e.g. education savings, adequate retirement income, wealth preservation, generational asset transfer). Having a plan serves as a set of guiding principles to making strategic investment decisions especially during this period when emotions can be tested. Adding, having a plan on how to navigate withdrawal and distributions following a significant financial market downturn is vital for retirees. A personal financial plan will help you look ahead and avoid short-term, hasty decisions without due consideration.

• You may have the urge to reduce risk. If you looked at your investment portfolio recently however, financial market dynamics may have altered your asset allocation already. Consider a 60% stocks / 40% bonds portfolio, emphasis on the higher percentage of exposure to risky assets (i.e. stocks). That same portfolio today is now 50% stocks / 50% bonds.

• Interest rates declined and therefore increased the importance of finding sources of income elsewhere, including dividend paying stocks and alternative investments like real estate. Long-term, income-oriented investment vehicles such as annuities may also be another source of current or future income stream.

• One approach to investing is the purchase of index funds or ETFs. Passive investment has garnered much attention especially during the bull market of the last decade. However, current financial market circumstances provides opportunities for active managers.

• We expect continued disruption of economic activity this year. However, we think these effects are temporary. We believe a path to recovery still exists. If 2020 sees prolonged isolation of the public, then, a recovery is less likely by year end. We will look to 2021 as a possible turnaround point. 

• The US financial market is moved by fundamental valuation, which depends on corporate forward looking earnings rather than months. This means that despite the financial squeeze in the short term many corporations are experiencing now, it is temporary. Instead, it is important to consider the business model and financial soundness of corporations in the decade ahead in light of current disruptions.

• Both emerging and international developed financial markets appear to have a valuation advantage over their US counterpart. The strong US dollar further amplifies this advantage and making a case for favor of non-US asset classes. Geographical diversification in other words is important when considering investment selection in a globally-connected world.