How to invest when the coronavirus pandemic and Trump send the Dow crashing: experts

The stock market has been obliterated. And indeed there is enough blame to go around.

One could blame the growing coronavirus pandemic and China’s failed containment measure. Blame could be thrown to an impotent response by the Trump administration. You could even cast some shade at the Federal Reserve for not pulling out the bazooka to clobber the rapidly spreading risk asset selloff.

This week alone, the Dow Jones Industrial Average has shed more than 4,000 points and is now in bear market. The S&P 500 is in bear market after a disastrous Friday session. India’s Sensex is in bear market. The MSCI All Country World Index is in bear market. Perceived safe-haven stocks such as Pfizer, Walmart, Coca-Cola, Apple, American Express and JPMorgan continued to be dumped hand over fist by freaked out investors.

The fact is the bear market is here — it’s alive and hungry to eat up more of your portfolio (what is left of it). Several pros talk with Yahoo Finance about what they are currently telling anxious clients.

Winnie Sun, Sun Group Wealth Partners managing director

“We see that with our clients right now, there is so much fear — the phones are off the hook these days,” Sun said on Yahoo Finance’s The First Trade. “I don’t think it [coronavirus] is fully priced into markets right now, there is a lot more we don’t know.”

Sun says her clients have a lack of confidence in government right now.

“There is total panic here. Clients fall into two categories. The first being I am a little bit older, closer to retirement, and they are really panicking because their portfolios are down heavy. Our younger clients have time on their hands and maybe it’s a time to add more to invest for retirement which I am not ready for.”

Sun says the situation in markets is on the chaotic side currently, and pulling the trigger on buying stocks at cheaper prices isn’t necessarily the right attack plan.

Gabriela Santos, JPMorgan Asset Management Global market strategist

“We are saying [to clients] indeed there is very little visibility, and that is part of what the market is reacting to. So we do expect a bit of a longer period here in the markets. It doesn’t mean it goes down everyday, it goes up a lot one day and down a lot the next day without a very clear trend until we get more visibility.”

“In terms of do I need to do anything right now completely depends on how portfolios are positioned to start the year in terms of time horizon. But overall we are advising clients to be prepared for a difficult short-term here — so adding protection whether it’s cash, Treasuries, gold, and safe-haven currencies. But also positioning for an eventual rebound.”

Santos does believe stocks will rebound in 2021.

Brian Nick, Nuveen chief investment strategist

“The problem is, if you are asking someone to take a leap you are not telling them how deep the hole is. We don’t know, this is a health care crisis at its core. I think the reason you are seeing response from central banks and in the president’s speech last night, it’s not a solution yet to the health care crisis.”

“What we are looking for is not a certain number for jobless claims or the unemployment rate moving up or down, it’s really when do we start seeing a slowdown in the number of new coronavirus cases in the United States and Europe. And until we see that, I don’t think we will be increasing risk at all. At the same time, we came into this relatively defensively positioned in the credit and equity markets so I don’t get the sense our portfolio managers are paring back risk even more. But are we bottom feeding and trying to search for name that have been beaten up in energy, industrials and materials — not until we see there will be a light at the end of the tunnel.”

Victoria Fernandez, Crossmark Global Investments chief market strategist

“On a day where we are having such large down movements, you want to be extremely cautious. I am not sure we would go [into the market] today. We would really like to see how things shake out through the day when we have more information coming out of the administration or central banks.”

Programming note: Yahoo Finance’s ‘The First Trade’ will be live on Friday at 8:30 a.m. ET with the best markets analysis and investing insight in the game. It’s time to protect your money, and we have your back.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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