Tips for a Tumultuous Market

It’s hard to believe that just a few short months ago, the term COVID-19 didn’t even exist. Here at CWM, we couldn’t know that a global pandemic was coming that would profoundly test our healthcare and social systems. But we could – and did – anticipate a significant test of our economic system, and most importantly, took steps to protect against it.
Volatility Next Exit

In a word, we were prepared. Our investment philosophy, which prioritizes limiting large losses over participating in all gains, was tailor-made for times like this.

We may not be able to care for our communities’ physical health, but we’re proudly helping clients pursue their financial health in this changing economic landscape. We’re also focused on widely sharing our data-driven insights to support better understanding of how the markets are evolving, and to look for opportune investment strategies that have recently seen major discounts.

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If you or someone in your network needs a second opinion from an informed, disciplined advisor, we are here to help. Visit our contact page to arrange a complimentary, no-pressure phone call. 

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As we discussed with clients and friends in our Thirdly series in mid-March, here is a look at what we know and what we anticipate, based on economic indicators and historic trends.

  • Priced for perfection. Until uncertainty around COVID-19 and the economic impact of quarantine and social-distancing measures hit, markets were priced for perfect conditions. As far back as fall 2019, reliable economic data indicated it would take just a slight breeze to sway the fragile framework of market gains built over years – and now, we find ourselves in the eye of a hurricane.
  • Fastest selloff in history. We are collectively experiencing the fastest market selloff in recorded history – and for those who didn’t take precautions, this environment is wiping away years of market gains. Fortunately, for CWM clients, markets becoming less expensive and valuations reaching reasonable levels can be a good thing, creating opportunities to buy low – as it makes sense with a client’s lifestyle goals and strategic financial plan.
  • We’re keeping a close watch on industries that have been hit hard by the recent market volatility. Stock selloffs are never uniform, and exploring hard-hit economic sectors may lead to valuable opportunities. At a time like this, we don’t advise chasing after “shiny objects.” Instead, we recommend focusing on the fundamentals: first replenish your savings to cover immediate needs; continue making, and even increase, contributions to your 401k and other investment accounts; then, if you’re able, invest in companies that are normally profitable and have ample reserves, at a lower price.
  • What about real estate? It’s not all about the markets right now. While you’re busy not spending time with other people, working on a mortgage refinance might be a smart step. The Fed has set interest rates at unprecedented low levels. They will take a short period of time to work through mortgage markets – and, in fact, banks temporarily raised rates to slow down the influx of applications – but opportunities to secure lower mortgage rates and payments are on the short-term horizon.

If you’re thinking about selling property, it’s important to know that changes in the Washington State Real Estate Excise Tax (REET) have increased effective tax rates for higher-valued properties while decreasing them for properties of lower value.

In such tumultuous times, it may feel as though there is no way to prepare for the unexpected—but that does not have to be the case. CWM clients can always count on us to provide data and evidence to help guide life’s important decisions, and prepare individuals and families for any next step, whether large or small.

In light of today’s ever-evolving circumstances, CWM’s advisors remain committed to partnering with our clients to pursue their ideas of living richly.

If you’re interested in learning more about our approach during volatile market conditions – or if you’re interested in becoming a CWM client yourself – please contact us.

We’re fully prepared to hold client consultations via video or phone conference to support social distancing and do our best to be thoughtful stewards of financial – and community – health.

The opinions discussed in the material is for general informational purposes only and is not intended to be a substitute for specific professional financial, tax or legal advice. Individual circumstances may vary.

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