The coronavirus pandemic has significantly slowed down economic activity — so much so that financial experts predict it will take several years for the markets to recover from what some say has the makings of another recession.
Even so, consultants such as Lisa Johnson contend that the upcoming weeks and months are opportune times for novice investors to purchase stock in companies and industries that have recently incurred strong consumer demand.
“If you haven’t invested up until now because of money issues, go ahead and jump in,” said Johnson, a licensed Primerica, Inc. representative of nearly eight years. “You can do e-trade or call a stock broker, but make sure it’s something you want to handle.”
Since the World Health Organization declared the coronavirus crisis as a global pandemic, Johnson, a native Washingtonian, has been resolute about watching companies involved in infrastructure and those receiving federal government grants, arguing that, no matter the shape of the markets, those companies will always play a crucial role in the economy.
She said those who could soon lose jobs they’ve depended upon for retirement savings and life insurance policies should pay attention to, and purchase the stocks of, streaming services, food delivery and other luxuries that those sequestered in their homes have prioritized in recent weeks.
“That’s how the wealthy get wealthier — they jump in,” Johnson said. “You maintain your wealth by keeping your money in the market. Since prices are low, you’re able to buy more shares. You’ll make more money on the back end.”
On Friday, March 20, Wall Street wrapped up its worst week in more than a decade when the Dow Jones Industrial Average — a stock market index that measures the performance of 30 large companies — dropped more than 900 points and the price of oil fell well below $20.
The Dow fell an additional 600 points Monday, creating further losses for investors and full-time employees with retirement accounts. Those left unscathed include senators who have been accused of insider trading for dumping millions of dollars worth of stocks before the coronavirus market crash.
In recent weeks, the Trump administration has proposed a payroll tax cut, the expansion of sick leave, and tax deferments on the airline, cruise and hospitality industries as a means of stabilizing the economy. As late as Monday morning, Senate Democrats and Republicans struggled to agree on the specifics of a $1.8 trillion coronavirus relief package intended to buoy large businesses and expand unemployment benefits, among other goals.
In addition to lowering interest rates to nearly zero percent, the Federal Reserve has purchased an unlimited number of bonds — including $200 million in mortgage-backed securities — as part of a program that’s gone on for more than a week. Although its assortment of economic stimulus measures had shown some promise of restoring the markets, some industry insiders such as Paul Hickey of the Bespoke Investment Group said the economy would have to come back to life before the markets experience long-term gains.
The novel coronavirus, which has caused elected officials across U.S. cities and states to cease large public gatherings and other forms of economic activity, threatens 37 million domestic jobs nationwide, including those created by small-business owners and the hospitality industry and in the education field.
In the District, the city council recently passed emergency legislation that rolled out employment and housing protections for residents affected by the public health state of emergency. At least 7,600 unemployment claims have since been submitted to the Department of Employment Services. Earlier this week, Mayor Muriel Bowser (D) announced microgrants for small businesses that have lost a quarter of their revenue in the weeks since the coronavirus struck the District.
Uncertainty about the pandemic’s effect on the housing market has compelled sellers to close properties more quickly. Since the Federal Reserve purchased several million in mortgage-backed securities, many have attempted to do so with lowering interest rates.
Some realtors, including Charles View, said the current environment places potential homebuyers, particularly those with high credit ratings, in a position to better negotiate the terms of an investment that would pay dividends within a decade.
“The local markets are more competitive, and sellers and buyers are going harder,” View said. “Buyers who have their ducks in a row are in a much better position and sellers want to lock that in sooner than later. They might have to lower their price by five percent but they can get their cash quicker.”