COVID-19 and increased market volatility have led to many new questions from our clients. We care about how this is impacting you—and how we can help. We will continue to be here to provide up-to-date information and answers for what's on your mind.
FAQs during COVID-19 and increased market volatility
COVID-19 and market volatility
Are we in a bear market?
Bear markets are commonly defined as having a decline of at least 20% from the market's high point (peak) to the low during the selloff. Based on this definition, we officially entered bear market territory on March 12, 2020.
To learn more about bear markets and what to consider, read our article about bear market basics.
How is COVID-19 impacting the markets?
In early 2020, the spread of the coronavirus precipitated a sharp drop in the stock market and a historical plunge in bond yields, sending us into a bear market. The question now is how long the correction will last and what impact government stimulus will have on economic growth, employment, and corporate earnings.
To stay informed, visit our page about market volatility and strategies for uncertain times.
What can past market downturns tell us about what to expect?
It's too soon to tell how long this market decline will last. Key factors will include when COVID-19 cases peak in the US and the impact of government stimulus on employment and economic growth.
Using the S&P 5001 as representative of the stock market, we've experienced a bear market 16 times since 1926, an average of about once every 6 years. When a bear market does happen, it tends to be fairly dramatic, with an average loss of almost 40%. And it tends to take a while to recover those losses—the average duration is 22 months.2
The good news is that in every case, stocks have come back, and often made sizable gains in the months immediately following the downturn. The past is no guarantee of future results, but historically even the worst markets have been temporary dips in a general march higher for stocks.
To learn more, read our article about bear market basics.
How concerned should I be during this downturn?
We're here to help and offer insights and financial planning to help you weather this storm.
A strong plan includes a mix of stocks, bonds, and cash that aligns with your goals, time horizon, and your ability to manage risk. Stay in touch with your emotions and what's driving them—but don't let them get the better of you as an investor.
Be a mindful investor. Read our article on markets, emotion, and you.
Should I change anything in my portfolio?
Your own situation is unique. While we are currently experiencing significant ongoing volatility, it's important to remember that it's a part of investing. Check to see whether your asset mix may have veered off course due to the recent market pullback. If so, consider rebalancing to your target mix. Rebalancing into investments that have lost value during a down market means investors may invest at a lower price.
If I have extra cash is now a good time to invest?
History shows us the stock market has not only recovered from downturns but spends much more time in expansion phases of the market than in contraction. Stay focused on your goals. If you have worked with Fidelity to develop a financial plan, the best course of action may be to do nothing because the plan is designed to withstand volatility, even sharp pullbacks.
Should people who are retired or very close to retirement do anything special with their investments?
For clients who are retired or near retirement with a diversified investment plan, staying partially or fully invested (and not moving to cash) is often the right decision, especially for those planning to enjoy a healthy and long retirement which could last 20 to 30+ years.
Consider working with a financial professional who can help you create a disciplined investment and income plan that suits your individual goals, risk tolerance, and life situation.
Should I stop contributing to my retirement accounts?
Even when the stock market ride gets bumpy, Fidelity reminds long-term investors to stick to their plan—to maintain a well-diversified portfolio (which reflects an asset mix appropriate for your financial circumstances) and continue to save and to invest those additional savings.
Consider working with a financial professional who can help you create a disciplined investment plan that suits your individual goals, risk tolerance, and life situation.
What is a margin call?
A margin call is a demand from your brokerage firm to increase the amount of equity in your account. FINRA 4210 requires that you maintain a minimum of 25% equity in your margin account; however, brokerage firms may require more. At Fidelity, the requirement is 30%.
What creates a margin call and when are they due?
Margin calls occur because your account has dropped in value either because the value of your holding has dropped, or because you've withdrawn cash or securities from your account so you no longer have enough account equity to meet the margin requirement. Margin calls are due immediately and require your prompt action.
How Fidelity can help you
What is Fidelity doing for my accounts?
"As the coronavirus (COVID-19) and the related market volatility continue to evolve, I want you to know that everyone at Fidelity is completely committed to helping you with all your financial service needs. Serving our clients and supporting our associates who help you are our top priorities." – Abigail P. Johnson, Chairman and CEO, Fidelity Investments
For managed accounts:
Today, while we have rebalanced client accounts to keep accounts aligned to a client’s financial goals, we are maintaining a more conservative investment positioning. Due to rising uncertainty on growth across a number of regions around the world, we have sought to lower risk across most diversified client accounts by reducing exposures to international stocks and increasing exposure to high-quality bonds, as appropriate. These types of bonds tend to perform relatively well during periods of market stress and slower economic growth, and may offer greater stability in the face of increased stock market volatility. For most clients, this recent investment action has brought overall stock allocations to a level that is slightly below their targeted long-term asset allocation mix. That’s because over the last several years we have gradually reduced investments in stocks, as well as commodities and high yield bonds, in a manner that is consistent with our view of a slowly maturing U.S. economy. We believe these actions may further help clients to weather ongoing stock market volatility.
For all other investment accounts:
If you have an account where you have chosen your own investments, we are here to help you navigate through your options. We often talk with our clients about changing levels of risk or making investment changes, as well as the considerations of leaving everything as is.
Are the Investor Centers open?
Our Investor Centers remain open only for services that cannot be completed digitally or by phone. We have extended the hours your dedicated financial professionals are available by phone to help you with your needs.
What services are available in the Investor Centers during COVID-19?
Investor Centers are available for services that cannot be completed digitally or by phone. We have placed secure drop boxes at Fidelity Investor Center locations for the following services:
- Paper checks for deposits
- New account paper applications
- Completed paperwork
Instructions for using the secure drop box will be posted at the Investor Center. Also, please note that we cannot accept stock certificates at our Investor Centers.
What transactions can I perform online?
You can perform all common transactions digitally at our customer service page which provides you with easy access to complete these tasks:
- View account information, see transaction history, and edit your personal profile
- Open a new account or contribute to an existing account
- Transfer funds between your Fidelity accounts
- Download tax forms
- Place a trade
- Contribute to an IRA
Transactions can also be completed on the Fidelity Mobile® App, including depositing checks on-the-go.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
As with all your investments through Fidelity, you must make your own determination whether an investment in any particular security or securities is consistent with your investment objectives, risk tolerance, financial situation, and evaluation of the security. Fidelity is not recommending or endorsing this investment by making it available to its customers.
Diversification and asset allocation do not ensure a profit or guarantee against loss.
Past performance is no guarantee of future results.
Margin trading entails greater risk, including, but not limited to, risk of loss and incurrence of margin interest debt, and is not suitable for all investors. Please assess your financial circumstances and risk tolerance before trading on margin. If the market value of the securities in your margin account declines, you may be required to deposit more money or securities in order to maintain your line of credit. If you are unable to do so, Fidelity may be required to sell all or a portion of your pledged assets. Margin credit is extended by National Financial Services, Member NYSE, SIPC.