Market Perspective 3/27/20

This week we saw a more concerted effort to address Covid-19 through the worldwide mobilization of medical and financial resources. We watched an unprecedented relief-package make its way through the Congress and Senate. America and much of the world stayed home and practiced social distancing.

Outlook and perspectives                        

· Clarity around policy contributed to a wave of stock market repairs as markets advanced off lows set earlier in the week

· Stock markets react to future expectations —Today, the velocity of changing conditions is leading to more uncertain expectations

· We expect more market swings to continue

· Global economic growth will decline materially in the short-term, however; economic growth will rebound

What's different about this time

This market decline is different from the 2008-09 financial crisis, when structural imbalances led to a real estate bubble and excessive risk-taking, especially within the financial sector. This current decline, as we know, is an event-driven shock. A pandemic of this magnitude, occurring in an age of global hyper-connectivity, has not happened before. And while history doesn't repeat, it does rhyme. Event-driven shocks, like what we’re experiencing now, have historically been shorter-lived than structural imbalances. The economy was relatively healthy before this crisis, creating a better footing to mitigate the pandemic.

This crisis is severe but will pass

As hard as 2008-09 was, it was developmental in the sense that the world learned essential lessons in how to respond effectively to global shocks. Today those lessons, as well as an underlying clarity of mission, provide a framework to make more informed decisions. This week both the US Federal Reserve and the government stepped in to do exactly that.

Opportunities we are reviewing

· Tax-loss swapping to reduce future tax implications

· Portfolio rebalancing (buying low) to take advantage of market levels

· Tax planning opportunities

For decades we, and you, have experienced both up and down financial market swings. Although different catalysts each time, we have been through declines like this before. 100% of the time, markets have recovered from declines. We will get through this; our experience has taught us to stay disciplined, avoid making short term decisions with long term money, and focus on what we can control.

Thomas G Fee
Managing Director
vectorwealth.com/thomas-fee

Jason Ranallo
Director Portfolio Management
vectorwealth.com/jason-ranallo

Office phone: 612-378-7560
www.vectorwealth.com/client

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