Aside from the truly awful consequences of the coronavirus in terms of lives lost and the disruptions to our lives, there has been a big toll on those who use funds to try to create a path to their financial well-being. But, fortunately, for those investors who did not panic and stuck with their portfolios, the financial course appears to have begun the process of righting itself. While this almost always is what happens following chaos and uncertainty, the process may be a slow one before life, in all respects, begins to return to a more normal track.
For investors, two important trends summarize how the investment environment has changed as explained below.
The Virus Appears to Have Changed the Trajectory of Stocks and Bonds
You may be surprised to realize that, in spite of the fact that we currently are in a super-strong, recovering bull market after a deep COVID-19-induced bear market, all is not nearly close to being back to normal. Yes, the S&P 500 and, especially, the NASDAQ indices, are now up for the year, with the Dow Jones Industrial Average down just a few percent in spite of the pandemic. But does this mean that the negative impact of coronavirus on your funds has been largely overcome? For typical fund investors, not by a longshot.
Most investors probably hold a diversified group of different funds drawn from different fund categories. Look at the following category averages for different types of funds, followed by the performances of two “benchmark” type of index funds, one for international stocks and the other for bonds. Note that the COVID-19-induced bear market began on Feb. 20. So, if you held on to your positions from that date right up to now, let’s see how you have done compared to how you