It’s a cold and snowy day here in the Rockies—perhaps the sun is shining a bit brighter wherever you may be on this Tuesday afternoon. It’s been a rough ride over the past 36 hours in the capital markets. Investors woke up on Monday, February 24, 2020, to unpleasant news that the coronavirus, COVID-19, continues to rattle economies across the globe. Both South Korea and Italy announced a growth in confirmed cases and have taken measures to try and limit the spread of the disease. The result yesterday was the DOW trading down 1031.33 points, or approximately 3.5%, and approximately 3% on the S&P 500 according to Bloomberg, with a continuation of steep negative returns into Tuesday (today).
There are a couple things to keep in mind when viewing this market volatility. First, markets have exhibited several 5% or greater short-term moves in the past several years, generally followed quickly by recoveries (these “shocks” are not as uncommon as they seem!). Second, this market has resisted the coronavirus fears since the beginning of the year, grinding slowly higher up until this week’s drop, wiping out gains for 2020 in most sectors and moving into negative territory for the year. An increase in market volatility was already expected this year as the global markets are still dealing with uncertainty around Brexit, US-China trade negotiations, and (have you heard?) a presidential election in the fall. Challenges with COVID-19 have added another layer of uncertainty to the global economy, and we are seeing this play out in markets this week.
So…what is an investor to do?? It’s tough to keep perspective when unknown risks are present, but perspective is what we need to focus on in times such as this. A recent article from First Trust does a great job of laying out some facts and logic around these concerns. Our views generally align with the comments in the article, and we would suggest taking 2-3 minutes to review it. I think you’ll find it helpful and insightful.
Sticking to a well-structured plan and portfolio through strong markets, as well as inevitable declines, is where our focus needs to remain. We appreciate your confidence in our team, and we are happy to talk in more detail at any time.
Strategic Financial Partners
Note: Consensus forecasts come from Bloomberg. This report was prepared by First Trust Advisors L. P., and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Please note an investor cannot invest directly in an index.
Joel Malick currently maintains the Accredited Investment Fiduciary (AIF®) and Accredited Wealth Management Advisor (AWMA®) designations. Joel and his team at Strategic Financial Partners recognize that running this race for the long term is one of the greatest challenges you’ll face in your lifetime. Thus, they combine critical planning and investment strategies with real-life perspectives. Their consultation is provided at no additional cost to 403(b) Alliance Retirement Plan participants.