Investors are being advised to “remain vigilant” as the world’s top scientists work on determining the true impact of the new COVID-19 variant.
Speaking on the issues, Principal Global’s Seema Shah said: “Until health experts better understand the potential impact of the Omicron COVID variant, investors should remain vigilant, focusing on appropriate portfolio diversification to weather market volatility.”
“There is still significant uncertainty about Omicron’s characteristics, and it will take some time before experts gain a better understanding of its potential impact,” Ms Shah reminded.
According to her, as the world waits to learn more, investors should keep two things in mind:
- In the United States, both federal and state governments have little appetite for new lockdowns, so Omicron is unlikely to trigger a plunge in US economic activity anywhere close to the scale of March 2020.
- Even last year, after dropping sharply, markets staged an impressive rebound that’s resulted in the S&P 500 soaring 98 per cent from its COVID-low and 35 per cent above its pre-pandemic high. Ms Shah opined that the decision then, as it would be now, to move to cash and try to time the market, was the wrong one.
“Market volatility will be elevated in the coming weeks as investors digest the potential implications of the Omicron variant,” Ms Shah said.
“Against this backdrop of uncertainty and angst, portfolio diversification, particularly considering exposure to both high yield and quality assets, remains the primary tool for investors.”
