Advice for Investors Following a Volatile Trading Week

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The market has had a wild ride.

Steve Skancke, chief economic advisor for Keel Point, joined TheStreet to discuss his advice for investors, and his economic outlook. 

Watch the full video above for more.

Video Transcript:

Katherine Ross:
The markets have been on quite a roller coaster ride this week. Joining me today to break it down is Steve Skancke, Chief Economic Advisor at Keel Point. Steve, let's talk about the economic impact of this week. What does this mean?

Steve Skancke:
Well as we continue to see, shutdowns and postponements and cancellations, obviously, that's going to be a reduction in some amount of spending. How much of that spending gets transferred, postponed or put at other places will be one of the determinants as to do we go into a recession and if we do, how deep is that recession going to be?

Katherine Ross:
Do you have any advice for investors who are worried about this market action right now?

Steve Skancke:
I think at this point, with the markets down 25%, the best advice is just to be calm and wait and see what happens. It's unlike what we had in 2008, which was a balance sheet correction with a lot of systemic and structural problems. This is driven by an event and the uncertainty around that event and we can see a start and an end to it, which gives us an opportunity to be more patient and wait it out. Anyone who at this point who is thinking about selling equities that are down 25%, is making a mistake. It's better to wait and see what happens and actually to be looking for buying opportunities that certainly will arise. And over the longer term, an equity portfolio, will enure to the benefit of the investor.

Katherine Ross:
Let's take a look at this package that we could get out of the White House and out of Capitol Hill, to help the pandemic that we're seeing. Do you think that that is enough to calm down the market volatility that we have seen so far?

Steve Skancke:
Well, it will be a good first step just to have something specific that seems to be addressing the particular need. There's been a lot of debate back and forth as to what it should be and what it should look like and how targeted it should be. The truth is when you need an immediate economic stimulus, something that's simple and broad based is the better way to start. Now I understand that the president has been proposing a suspension of payroll taxes that the Social Security FICA tax withholding and what companies pay. That would actually have a big benefit and because it's such a regressive tax, would have a bigger benefit for those who need it most. There's been resistance to that.

Steve Skancke:
There was also a focus on getting out of the way of testing and I did see that the FDA has approved ARUP testing system and protocol that's being made available in the United States and they're allowing states to do some things as well. Something as specific as that will have a very positive impact and I think that we'll see more of that. When I last checked, the president is going to speak at 3:00 and I'm hoping that there will be some attractive specifics in what he says. If so, the market could react very positively to that.

Katherine Ross:
Steve, thank you so much for joining us. It's always a pleasure to hear your take. And, of course, guys, for more on the markets, head on over to thestreet.com.

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