Ceredex Value Advisors provides an update on the coronavirus market situation and the opportunity that volatility creates.
As new data is constantly emerging regarding the coronavirus pandemic, market participants are looking for an answer to the looming question: When can we expect to see light and the end of this crisis? Realistically, it is impossible to know when we will see a meaningful recovery. We must brace for this situation to last longer than current assumptions point. On the positive, Asia is slowly emerging and starting to return to normalcy. At the same time, caution still remains as the U.S. and the world at large seeks control over our shared unseen enemy.
Here’s what we do know. Markets are anticipating a weak second quarter, with negative GDP and high unemployment rates not previously experienced by many investors in their lifetime. Also, yet to be absorbed by equity investors are the quarterly earnings and outlooks from management teams that will be coming out in the next reporting season, just weeks away. Looking out to the second half, the extent to which market stability can be restored will largely depend on how well social distancing and global fiscal/monetary programs can provide buoyancy to economies and reassurance to jittery markets.
Using past downturns as a guide, this unfathomable period provides investors with medium to long-term horizons an opportunity to invest in high quality companies selling at levels not seen since the great financial crisis of 2008. Our investment team has been together 25 years and is experienced at navigating volatility. As we have articulated in the past, we are positioning our portfolios for the eventual resolution of the current situation. Consistent with our bottom-up value philosophy, we remain focused on dividend-paying companies with underappreciated fundamentals and positive catalysts that signal upside potential. We are committed to our clients, and thank them for their trust and patience through these challenging times.
The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.