Springfield Business Journal_2020-06-15

50 · SBJ.NET JUNE 15-21, 2020 30,000 25,000 20,000 15,000 March 23 April 1 May 1 June 10 important to have a plan for long-term as- sets to withstand market volatility – even when it’s a worldwide pandemic, he said.  “If your plan is in place where you’re not in a position to have to sell stocks when they are down, then you can afford to stay the course if there is a major shock to the stock market like we experienced in March,” he said, noting the Dow’s 20% drop from its February high took it into a bear market. “For most investors, when you see the stock market drop as quickly and as large a magnitude as the drop was in March, it’s human nature to get worried and get concerned, and, in some cases, reach panic.” Focusing on the long term and not acting on emotion is the most profitable strategy, Froehle said, adding sometimes the most important course of action is to not change anything in a portfolio. “Investment in the equity market is pay- ing for risk,” Homan said. “The risk is that you have to weather the storms of volatility like we’ve seen here.” Back to work The market’s fall was in response to eco- nomic shutdowns, which caused a heavy shedding of U.S. jobs, Froehle said. Jobs will return, but no one knows how many and how soon. “In the absence of further widespread economic shutdowns, the U.S. economy is poised to make a comeback over the next year,” he said. “The recent stock market rally is reflecting that.” While the federal coronavirus relief act included a provision of an additional $600 per week for the unemployed, it’s set to expire at the end of July. Mullins said the loss of the benefit might be a help and a hin- drance for the economy. He said it’s a loss of discretionary income for those who are jobless and could lead to further depression of consumer spend- ing. But it also could incentivize people to get back into the workforce who have been making more with the federal unemploy- ment supplement than when they were working full time. “When that goes away, it’s going to put pressure on people who aren’t seriously considering going back to work,” Mullins said. “That can be a positive thing.” Short-term economic forecasts are dif- ficult to rely on, Mullins said. But he said those who trade stocks and bonds believe a recovery will be relatively quick. “It depends to a large degree on what kind of flare-ups we see in the pandemic later on this summer,” he said. “We’ll see the results of the protest movement that has had a lot of people in close proximity. It’s going to take a few weeks to find out the full extent of what the opening up of differ- ent states is going to do to the contagion.” If COVID-19 infection numbers start to significantly rise again, Mullins said locking down the economy could be on the table, possibly reversing the positive trend reflected in May’s unemployment numbers. Froehle said the market hasn’t had a major pullback since March 23, but he wouldn’t be surprised if one happens in the next year. That depends on the success of jobs returning and no more major inter- ruptions, such as stay-at-home orders.  Still, he and Homan remain bullish on the stock market’s long-term prospects.  “It always pays to be a little optimistic. You can’t get caught up in negativity as an investor,” Homan said. “That’s a rule of thumb here and that will generally al- ways apply.” FROM THE COVER The Challenge is great but brighter days are ahead Technology Focused. Service Driven. (417) 831-7077 info@PittTechnologyGroup.com Our sleeves are rolled up and ready to help you write YOUR Come Back Story. Our sleeves are rolled up and ready to help you write YOUR comeback story. The challenge is great, but brighter days are ahead. Stocks: Economy under watch this year Continued from page 1 AMANDA MILLER Source: Dow Jones Industrial Average index Since the Dow Jones Industrial Average closed March 23 at a 2020 low of 18,591 points, the stock market has rallied. It surpassed 27,000 points June 5 after May’s jobless rate was announced.