The past few weeks have been a difficult time for investors and all Americans. The outbreak of the Coronavirus has upended just about every aspect of our lives. We want each of you to know that we care about you and want to help you through the challenges the outbreak has created.
On March 12, 2020, the S&P 500 closed down 9.51%, its worst day since October 19, 1987, when the S&P closed down 20.47%, the single worst day in the history of the S&P 500. Although October 19, 1987 is still referred to as "Black Monday" because of its distinction as the single worst day for the S&P, what is not widely remembered is that even though 1987 had the worst single day for the US stock market, the S&P still closed up 5.8% for the entire year 1987. 1
When the market has the kind of volatility we have experienced recently, it is more difficult to focus on long term returns. The daily headlines, social media and the 24/7 news cycle all focus us on what is happening now, rather than what has historically happened after every crisis our country has ever faced. If history teaches us anything, it is that our country has both the will and the resources to confront the Coronavirus outbreak, to take every measure possible to mitigate its effects, and to work toward the economic resiliency that contributes to our financial health as a country.
Historically, we also know that after every market downturn, the market has recovered and eventually moved up to historic highs again. Staying with your investment allocation may provide the greatest opportunity to participate in the future recovery. 2 We also know that your portfolios have been carefully crafted to reflect the time frame of your investment, and if the time frame is long term, stocks historically have provided the potential for greater returns when compared to other asset classes. The price we pay for long term growth is going through short term volatility.
With the uncertainty of the present time, this may be a challenging time for you. If you are feeling concerned about your portfolio or any aspect of your financial life, please reach out to us. There are opportunities created by the current market conditions. Interest rates have come down and now may be a good time to look at your mortgage interest rate and decide if refinancing makes sense. Market downturns also create opportunities to add to your investment accounts at lower prices. If you haven't fully funded your retirement plans, this may be a good time to so. If you are taking money out of your accounts, you may want to reduce or suspend these withdrawals, if possible, until the market recovers. We are here to help you evaluate your options and make the best decisions in light of your financial situation.
Finally, take time to do the things that keep you healthy and happy. With spring arriving next week, take a walk in the increasing hours of daylight. The crocus are blooming and spring bulbs are popping through the cold earth, ready to bloom in the weeks ahead. Have a good meal with your family and loved ones. Read a good book, watch a good movie on demand, play a game with your friends and family, tell your favorite joke. Drink plenty of water and look for ways to help family and friends. Remember that tough time end, and that together is the best way to get through the days ahead.
We appreciate each of you and thank you for the opportunity to help you with your investments and financial planning. Please know that we will continue our efforts to assist each of you in achieving your heartfelt financial goals. This too shall pass. Be of good cheer!
1 The S&P 500 index is unmanaged and cannot be directly invested into
2 Asset allocation is an investment strategy that can help manage risk within your portfolio but it does not guarantee profits or protect against loss in declining markets
Investing involves risk and the potential to lose principal. Past performance does not guarantee future results.
This post is meant to be general, and it is not investment or financial advice or a specific recommendation of any kind. Opinions and forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which can change over time. Actual results could differ materially from those anticipated. Please consult your financial advisor before making financial decisions.