By Robert S. Bacarella | May 12, 2020

Before putting your tax refund into the market, first establish an investment objective. That’s even more important than the timing or shape of the market recovery, when it comes. Without an objective, an investor is like a traveler without a destination. For example, say your objective is long-term savings for retirement. In that case, you may consider these low prices as an opportunity to accumulate quality growth companies at a discount—companies such as Disney, Microsoft, Coca-Cola or MasterCard. Or, say your objective is shorter-term. In that case, you may prefer investing in those sectors most impacted by the virus, such as airlines, specialty retail, cruise lines, and casino stocks. In these areas, some specific companies for potential consideration include Southwest Airlines, Kohl’s Department Stores, Royal Caribbean or Las Vegas Sands. All investments involve risk and you could lose money.

Concerns over the impact of the Coronavirus have brought the economy to a halt and propelled stock prices lower. We believe this pandemic will eventually end, but currently don’t know the shape of the recovery: V, U, W, L or some combination of these. But regardless of the “shape” the recovery takes, understand investing as not just picking stocks, but rather as a “mindset.” For example:

  • Generally, consider stocks you are familiar with and comfortable holding with the underlying premise that “ there is never a bad time for a good investment.”
  • Don’t try to time the market, as neither a Warren Buffett or Jimmy Buffett knows if a stock will go up, down or sideways.
  • Stocks move on changing expectations, and if you believe that people will fly again, travel again, shop again, eat out and attend sporting events, this may be a good time to start dollar cost averaging into the market.

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Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates.

Standard and Poor’s 500® Index is a capitalization-weighted index of 500 stocks. This unmanaged index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941-43 base period. One cannot invest directly in an index.