The last three weeks have been a wild ride for the financial markets, as investors face extreme market volatility resulting from the global COVID-19 pandemic. The chart above tracks the daily price movement in equities in the Dow Jones Industrial Average during this time period, but the same story could be depicted in all risk markets. Government and central banks around the world are throwing an awful lot of firepower at the crisis. While unlikely to avert a recession, these efforts will certainly aid the eventual recovery. The ultimate implications of the outbreak are all about time — time for everybody to abide by the social distancing and hygiene rules being required of us, time to distribute test kits across the nation, time to see infection rates plateau and, ultimately, time to develop a vaccine. 2020 earnings are washed out, as the focus turns to liquidity and the ability to get into 2021 and beyond. Nobody wants to catch a falling knife, but there are some attractive opportunities in the fixed income markets for patient investors.
As we navigate through this uncharted territory, we must remember that we will persevere. Time and again, our society has proven that we are resilient and capable of overcoming challenges when we work together.
As we all try to stay healthy, change our daily behavior and navigate unbelievably volatile markets, consider a memorable quote from one of my favorite movies — a must-watch while we all learn to spend a lot of time at home:
“Man looks into the abyss, and there's nothin' staring back at him. At that moment, man finds his character, and that's what keeps him out of the abyss.”
-Lou Mannheim (Hal Holbrook), from the 1987 movie, “Wall Street”
The material provided here is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual Asset Management.
This material is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
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