The COVID-19 Pandemic has hit the economy hard. Our mission is “making sense of making money for making a difference”, so we want to provide you with an honest update on the stock market six months after the pandemic hit. Whether you’re just getting into the market or you’ve been invested for decades, this post will help you to determine what the state of the market is now.
An Honest Update on the Stock Market
Walking in Fear
First, I want to encourage you with this Scripture. Proverbs 10:22 says, “The blessing of the Lord makes one rich, And He adds no sorrow with it.” That means we can walk in peace and rest knowing that true riches come from the Lord. As you think about the stock market, retirement or investing for your future, I encourage you not to make decisions out of fear. Now is a good time to make sure you’re reflecting on the Word of the Lord and allowing Him to fill you with peace.
The image below describes the current investment framework as per our research.
As you can see, the markets have come back pretty remarkably even though the economy is still pretty negative. A lot of what is driving the markets is the Federal Reserve Bank’s Monetary Policies. As of right now, the Federal Reserve is very accommodating to the economy. This looks like low-interest rates, bailing out companies, and being a back stop. Now, Market Valuations and Economic Growth are pretty negative in this graph. Market Valuations weigh the cost of buying stock compared to the earnings of the corporation you’re buying stock in. Economic growth is negative because we have over 10% unemployment and a high number of corporations that are filing for bankruptcy.
Deciding How to Invest Portfolios
Though the Economic Growth and Market Valuations are low, there are many different considerations that go into deciding whether or not to invest in certain markets. The fact that Monetary Policy is in the green is a good sign. All this means is you need to have a strategic plan for where you’re going to invest, whether that’s in the stock market, re-investing in your business, or real estate.
If you would like help learning more about the stock market or where to invest your portfolio, click here! I encourage you to sign up for tonight’s free live stream event here so you can stay up to date on the market. You’ll also learn best practices for making sense of making money for making a difference.