Ric Edelman Warns of Long-Term Pandemic Impact

Edelman argues that the U.S. economy will likely not fully recover from the once-in-100-years financial crisis and grinding unemployment levels until a vaccine is in wide distribution.

According to the report, the coronavirus lockdown has left many Americans struggling to pay their mortgages and rent. This, along with the shift to remote work, will adversely affect commercial real estate for a long time to come, with negative implications for urban markets.

The pandemic has also exacerbated the already serious retirement savings gap in the U.S., according to the report. Reliance on Social Security has reached record levels just as the Social Security Trust Fund is being depleted.

The report notes that investors are behaving euphorically, evidenced by the S&P 500's trading at 22 times projected earnings. But Edelman advises caution as stock prices may fall, and the declines could be comparable to those seen in 2007–2009 before they begin to recover.

What makes this possible, he writes, is that no effective treatment, cure or vaccine has yet been achieved, and all too many companies will continue to experience profit declines until most Americans are back in work and feel safe to congregate.

Edelman lays out his firm's four-pillared investment approach in the report:

• Continually maintain a properly diversified portfolio, one that features 15 to 17 major asset classes and market sectors, in addition to U.S. stocks
• Maintain a long-term focus as history has shown that market values have consistently risen over longer periods
• Rebalance strategically
• Use low-cost, tax-efficient investments.

The report includes a 10-question investment readiness quiz that can help investors determine if they're in danger of panicking the next time stocks prices fall.

— Related on ThinkAdvisor:

• The 2020 IA25: Ric Edelman
• Ric Edelman: Advisors Shouldn't Ignore Bitcoin, Blockchain