05 Apr In the midst of coronavirus stock losses, who is buying?

Q. The coronavirus epidemic has created fears in many investors who are selling stocks, possibly at a loss. But there is no sale without a buyer. Who is selling stocks and who is buying?
— Investor

A. The COVID-19 pandemic has been a challenging time for investors.

Amid the coronavirus volatility, we’ve seen sharp declines and sudden rises.

Individuals and institutional investors — mutual fund managers, pension managers and the like — are both buying and selling.

We just completed the longest economic expansion followed by the most rapid decline of more than 30% ever, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

She said last year was the best year in the markets since 1998, and at the time of publication, the markets are down year to date around 17% after some recovery last week.

D’Agostini said we need to have some understanding into the timing of the peak for COVID-19 cases.

“This continues to be uncertain, but likely may have some better clarity in the next couple of weeks,” she said. “LPL Research shows that the average decline in a recession is 30%, which we have already hit.”

She said the markets have probably priced in the recession at this point, with many already having shed or reduced their equity exposure.

“The local and federal stimulus has been quick and deep with $2 trillion in aid that will be distributed to revitalize our economy,” D’Agostini said. “This equates to 9.3% of our GDP.”

While we are not sure how long this will last, she said, there could be opportunities now in the markets because stocks are much less expensive than they were in February.

“Unlike 2008, the economy was strong before this started,” she said. “There is some conventional wisdom that the recovery will be more rapid as we see cases start to diminish. It might be a good time to invest more into your 401(k), 529 plans, etc.”

Email your questions to .

This story was originally published on April 6, 2020.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.