File photo / Jim Neuger
Steve Tenney of Great Diamond Partners
Updated: March 13, 2020
After stock market plunge, Maine investment advisors urge caution
File Photo
Concerns about the coronavirus outbreak prompted the biggest one-day stock market selloff since 1987.
With concerns about the coronavirus outbreak spooking financial markets and investors, Mainebiz asked a handful of experts for their insights and any advice on how to stay calm and carry on in these troubled times.
Three are in wealth management, the other in accounting. Here's what they told us.
Steve Tenney, founding partner and CEO, Great Diamond Partners: "The velocity and magnitude of the changes have been stunning. At the same time, we did not enter this crisis with bubbles like we had in 2000 and 2008. Given the virus has room to run, we need less bad news in order for the markets to stabilize. Meanwhile, trying to 'get out until things clear up' is difficult if not impossible."
Geoff Alexander, CEO, R.M. Davis: "Broadly speaking, the market is falling in tandem with the spread of the virus outside of China. There is economic justification for the decline in stock prices as corporate earnings will be weaker due to slowing economic growth. The risk of a recession in the United States has increased appreciably in the last several weeks.
Courtesy/R.M. Davis
Geoff Alexander, CEO of R.M. Davis
"So, what is an investor to do? First, remember that fear and greed are powerful emotions, therefore, invest with your head and not with your heart. Unfortunately, the 24/7 news flow is rarely helpful with making smart decisions so try hard to tune it out.
"Second, all investment strategies should be directly linked to a thoughtful financial plan. If done correctly, and proactively monitored, then there should always be sufficient capital to ride through the inevitable downturn without having to sell stocks at an inopportune time. In other words, bear markets should result in a temporary impairment of your net worth, yet should have much less impact on your financial security. For example, if you have set aside five years’ worth of annual expenses in fixed income, then you should be able to largely ignore a temporary decline in the market.
"Finally, it is critical to remember that stocks can be disturbingly volatile in the short term, however the odds of making money over longer periods is overwhelmingly in your favor."
Courtesy / Spinnaker Trust
Jessamyn Norton, Spinnaker Trust
Jessamyn Norton, chief investment officer, Spinnaker Trust: “The market’s dramatic drop in reaction to the spread of Coronavirus has many people on edge. The markets will be fine in time and taking a long term approach is always prudent. In addition, though it appears that economic activity will slow considerably over the coming months due to the coronavirus, the U.S. economy is came into this health crisis in good shape.
“In the meantime, we are preparing in two ways. First, as a chartered bank, we have a continuity plan in place ensures there will be no interruption in services. Second, we have been patiently awaiting a market correction of this type for several months and have been implementing portfolio shifts accordingly.
"The market situation is obviously quite fluid. The velocity and magnitude of the market’s current decline trails only October 1987 and October 2008. However, 1987 ended up +2% for the year and while 2008 was negative, March 2009 was the bottom and the market subsequently experienced one of its longest periods of growth in history.”
Photo / Jim Neuger
CPA Tabitha Swanson, founder of the Swanson Group.
Tabitha Swanson, founder and CEO, Swanson Group: "In President Trump’s address, he instructed the Treasury Department to defer tax payments without interest or penalty and so now we await further detail on the government’s plan. If the virus continues to keep people away from their tax preparers, the government will likely issue extensions for both individuals and small businesses. If you are in a position that is challenging for your business due to the coronanavirus, whether it be you have to close for a period of time or business is down, you should reach out to your accountant for advisement as they may be aware of options to help you.
"Here in Westbrook, we are working 80-plus hours a week trying to get as many clients’ returns filed as possible, and at the same time we are trying to keep our own staff healthy. The Swanson Group has 20-plus employees, and all are encouraged to work remotely when possible. Further, we are encouraging clients to use the secure, confidential electronic portal to submit important tax documents to their preparers. Technology is going to enable the work flow to continue as we get through this very interesting tax season."
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