For the first couple of months of the coronavirus, investors reacted in horror at the ravages of the virus on the stock market, the American economy, household finances, unemployment and small business fortunes.
In May, investors began to respond. They responded to the opportunities that are present for investment on the assumption that stock market pries will recover as the economy recovers. They responded to advice from their advisors and they responded to the way their advisors offered that response.
Spectrem’s three-moth study of the coronavirus is now complete. The May edition of Corona Crash: What Advisors Should Be Saying To Their Investors Now* is out and shows how investors have moved past the shock phase into the adjustment phase of their reaction to the pandemic and its economic impact.
More than half (52 percent) of all investors report losing at least a fair amount of their net worth as a result of the coronavirus pandemic, with 13 percent admitted to a significant loss of net worth. Only 11 percent of all investors indicated that had no personal financial impact from the virus and its effects on the stock market and the economy.
Advisors need to know which of their clients have felt the strongest negative impact from the coronavirus and must determine what path those clients want to take in order to respond in a way that can allow them to regain some of that lost net worth or set themselves up for a proper response when the recovery begins.
While 62 percent of all investors said they have made no moves yet in response to the virus and the powerful manner in which it has impacted the economy, the Corona Crash report shows that more investors have purchased equities than those who have sold them, and the difference is notably wide. Twenty-four percent of all investors have purchased equities since the start of the coronavirus pandemic in March, while only 16 percent have sold equities. There is far more movement in equity markets than in bonds markets in response to the coronavirus crash.
It is interesting to note that investors are already making portfolio decisions in reaction to the virus despite the fact that a majority of investors (70 percent) believe it will take at least one year and perhaps longer for the U.S. economy to return to the levels it was at before the coronavirus struck.
Keywords: coronavirus, Spectrem, investors, Advisors, equities, bonds, advisors
*This research is part of your Spectrem subscription.