Newport's Perspective on Market Volatility

Mar 30, 2020

The coronavirus (COVID-19) outbreak has adversely impacted global financial markets over the past few weeks, resulting in significant volatility. For investors—including participants in your retirement plan—this period of uncertainty can be unsettling.

With so much news and real time information readily at hand, it can be difficult for anyone to process what is relevant and critical for making prudent financial decisions. This “information overload” may cause investors to act on emotion in the short term rather than remaining focused on their long-term investment objectives. Your plan advisor a valuable resource during these times.

As the sponsor of a retirement plan, it is normal to question the appropriate response to recent events. As in past periods of uncertainty, Newport recommends following a prudent investment process and avoid making decisions based upon emotions or recent market performance.

While the road ahead may be turbulent in the near term, remember that keeping a long-term perspective is always important. History has shown that our financial markets are remarkably resilient and price stability will be achieved. When that happens, the upswings can come as quickly as the drawdowns. Attempting to time the market may result in missing the best days of the recovery with the potential for an adverse long-lasting impact on investor portfolios.

It is essential for investors to view recent investment performance in light of their overall objectives, risk tolerance and time horizon before making any changes to their portfolio or investment strategy. Unless these or surrounding circumstances have changed, we recommend staying the course while continuing to periodically rebalance their portfolio and dollar cost average when possible.

If you have additional questions, please consult with your investment advisor.

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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services. 

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