It’s not easy, but look past market selloff

These are challenging times. Like everyone, you are concerned about keeping your family safe and healthy, and you’re doing your part to help protect your community from the effects of the coronavirus. And if you’re an investor, you must also address your financial situation. How should you respond to the current market volatility and recent declines in investment prices? For one thing, try to avoid what many others seem to be doing: panicking. The market selloff may feel unsettling, but it appears to be driven as much, or more, by fear and panic than by economic or financial reality. Uncertainty is high, but there are reasons – solid, objective reasons – that provide more confidence in the longer-term outlook, suggesting that conditions still warrant an eventual rebound. U.S. unemployment entered this situation near a 50-year low with solid wage growth. We will see a temporary disruption to the labor market, of course, along with a decline in economic activity, but households entered this period in generally good shape. Furthermore, housing market indicators were moving upward and the decline in mortgage rates could add more strength. Also, the Federal Reserve’s recent interest rate cuts, taking short-term rates back to near 0 percent, will support the economic rebound as the impact of the virus containment efforts eventually fade.