The S&P 500 Index was down 5% this week as of trading this afternoon as investors weighed the impact of Covid-19’s resurgence on the economy. And the two things that can buoy investor sentiment—an economic stimulus package and a vaccine—probably won’t come quick enough to right the ship in the near term, according to Liz Ann Sonders, senior vice president and chief investment strategist at Charles Schwab & Co.

Sonders spoke at a session today during the virtual Schwab IMPACT conference. In her opinion, a vaccine for Covid-19—at least initially—might not be the light switch that turns on the economy or a booster shot for equities.

She noted that while a vaccine is an absolute necessity to get the world back on the rails, the first widely available vaccine will likely come with various questions ranging from its efficacy and availability to how many times to take it and the logistics of storing it.

“I’m concerned there’s this thinking that a vaccine is the end all/be all,” Sonders said. “I think it’s part of the puzzle.”

Another part of the coronavirus-related puzzle, at least economically speaking, is whether Congress and the White House can iron out a fiscal stimulus package to mitigate or prevent further economic damage caused by the virus and its aftermath.

“It’s increasingly unlikely we’ll get a stimulus bill between now and the election,” Sonders said, adding that if a stimulus package isn’t passed before next Tuesday’s election, then the betting odds are on something happening post-inauguration in January versus in a lame-duck session by year end.

“I do think we have a pretty big risk of seeing economic growth falter, particularly if the virus continues to worsen from here, even absent mandated lockdowns, just because of the human reaction we have to it, and in particular in the absence of any fiscal relief near term,” she said.

In other market-related matters, Sonders noted that equities were perhaps primed for the recent pullback due to investor overconfidence and inflated valuations.

“The sentiment environment suggests a bit of complacency, if not overt speculative froth among certain cohorts and certain pockets of the market,” she said. “I think we almost hit that sort of contrarian, speculative excess needed to reset the environment, and that led to what has been a troubling couple of days.”

Regarding valuations, she offered that equity prices are currently on the high side. “In simplistic terms, the market is expensive,” she stated.

Sonders addressed a question submitted from an audience member about whether value investing can ever take the lead again versus growth investing.

“Many people answer this with a simple yes or no, but my answer is a bit more nuanced,“ she explained. “What do you mean by value stocks? Are you talking about value indexes outperforming growth indexes? And even if you’re talking about that, are you talking about the S&P Value Index? The Russell 1000 Value Index? The Russell 200 Value Index? The sector makeup of these three value indexes are entirely different, and in turn, performance is different.”

Sonders noted that both deep value stocks and those on the high end of the price-to-earnings multiple spectrum have underperformed since the recent peak in U.S. equities this autumn.

“What’s starting to perform is a function of growth,” she said. “I think the factor of growth is still necessary for performance, but with a value mindset. To use an old-fashioned term, it’s growth at a reasonable price.”

She added that investors should apply a quality filter that looks at the quality of a company's balance sheet, a lower debt-to-equity ratio, strong free cash flow and the quality of the management team.

“I think the combination of these factors are where you’ll find the leadership is,” Sonders said.