Coronavirus and the Markets
March 19, 2020
The CARES Act, the Markets, and Your Long-Term Financial Plan
April 6, 2020

How Recent Market and Economic Events Affect Your Financial Picture


By the Shone Wealth Management Team

Over the next month, we will be publishing weekly write-ups that will give you updates on the markets and actions we are taking on behalf of our clients.

Below, you will find a recap of the latest news you should know, plus what to watch out for as we head into the week.

What Happened in the Markets?

When markets closed on Friday, March 20, the S&P 500 had lost roughly 30% of its value from its February 19 peak, and suffered its worst one-week decline since 2008. It had all but wiped out all gains accumulated under the Trump administration. At the time, there was a Senate stimulus bill largely expected to pass over the weekend. The Fed had already cut interest rates to 0% and announced rescue measures around its bond-buying program to the tune of $700 billion.

But the market took a turn for the better last week, as the major indexes rallied for one of their best weeks ever. The S&P 500 posted its biggest three-day gain since 1933 and recorded its best week since March 2009 — just one week after its worst week since October 2008. The Dow turned in its best weekly performance since 1938. Despite paring some of their gains on Friday and finishing the session in the red, the S&P 500 gained 10.3% for the week, while the Dow gained 12.8%. Investors who attempted to time the market would have had a rough week.

There were, of course, fiscal and monetary policy measures taken to stem the downward tide and ease investors’ fears. After two failed votes, the Senate passed a $2 trillion stimulus bill (full details below). The Fed announced last Monday morning that there would be no limits to its bond-buying program, which had originally been capped at $700 billion, and announced new credit facilities, expanded liquidity pools, and the launch of a “Main Street Business Lending Program.”

Looking back on the last two weeks, it may be that this correction has already priced-in a sharp recession and economic distress, leading to lower expectations for consumption, production, and growth. It may also be the case that these are short-term fluctuations, as markets handle uncertainty and reassess expectations. We don’t speculate because we can’t predict what the future holds.

What Should You Keep in Mind for This Week?

We don’t know for certain how long the COVID-19 crisis will last, and we don’t know how the market will react to negative — or positive — news that arises from it.

Emotions are high, anxiety is prevalent, fear is palpable — these are all normal feelings. But there is a solution to ease the mental toll of the unknown, especially when it comes to your financial picture and creating solid outcomes over time. This is what we have been doing over the last two weeks, when it comes to your investment experience:

  • Tax-Loss Harvesting: Tax-loss harvesting is the silver lining of market volatility. We are “harvesting” losses and immediately buying replacement securities in the same asset class. This allows us to book a loss today, help you stay invested and offset future gains. Our strategy has been to replace Mutual Funds with Exchange-Traded Funds because they are less likely to pay a capital gain at the end of the year. Many funds are experiencing large outflows and have very long-term gains they may have to pay late this year.

  • Rebalancing: This is a very good time to rebalance your portfolio back to your target allocation or desired level of risk. Both of these strategies are proactive and will help you work toward the goals that are outlined in your financial plan, regardless of what’s happening in the markets.

When it comes to your investment portfolio, there are three main ways we are accomplishing the rebalance:

1. Using additional cash that has been sent to us.
2. Adjusting what we sell to raise cash needed for monthly distributions. We would currently sell fixed income and not stocks.
3. Implementing a broader-based rebalance once the bond markets calm down.

We continually monitor all these factors for the best course of action.

This is also a good time to go through your financial health checklist:

1. Assess your job status and cash flow.
2. Balance your emergency fund and any large expenses expected in the next 6 months.
3. Plan ahead for any updates to your goals/objectives and how those relate to the construction of your portfolio.

Moving on From the Markets: What’s Happening on the Policy Front?

After a unanimous vote in the Senate, the House gave final approval Friday on the largest stimulus bill in modern American history. It is the latest legislative effort designed to bolster the U.S. economy during the ongoing Coronavirus pandemic.

Here is a breakdown of the bill for individuals, businesses, state and local governments, and hospitals:

For Individuals:

  • Individuals who earn $75,000 or less would get direct payments of $1,200. These payments would phase down before ending altogether for those earning more than $99,000. Families would receive an additional $500 per child.
  • They will also receive an expansion of unemployment benefits that would extend unemployment insurance by 13 weeks. Unemployed workers would also receive an additional $600 a week for four months.

For Large Businesses:

  • Large businesses grappling with the Coronavirus pandemic will benefit from $500 billion in loans.
  • Businesses that receive a government loan must halt stock buybacks for the length of the government assistance, plus one additional year. There would also be limits on executive bonuses.
  • There would be strict oversight of these loans in the form of an inspector general and a five-person panel appointed by Congress.

For Small Businesses:

  • Small businesses that keep up their payrolls during the Coronavirus crisis will receive $377 billion in loans at low or no interest.
  • Small businesses that pledged to keep their workers on the payroll would also receive cash-flow assistance structured as federally guaranteed loans. These loans would be forgiven if the business continued to pay its workers for the duration of the crisis.

For State and Local Governments:

  • $150 billion in funding, including $400 million in election assistance for 2020.

For Hospitals:

  • $130 billion in funding, which is $55 billion more than what was originally agreed upon. $100 billion would go directly to hospitals, $1 billion would go to the Indian Health Service, and the remainder would be used to increase supplies of medical equipment.

Keep Calm, Carry On

We can assume that there will be periods of volatility moving forward and that more changes are in store on the economic and policy fronts. We are committed to updating you on the factors that impact your day-to-day life and financial situations. If you have any questions or simply would like to discuss some of your concerns about our current environment, please contact us by email or by calling (925) 472-0874.

We appreciate and take very seriously the trust you have placed with us.

Your team at Shone Wealth Management



The S&P 500 is a market capitalization-weighted index that tracks the 500 largest companies listed on the New York Stock Exchange or NASDAQ Composite. It is used as a benchmark of the overall stock market’s performance.

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