In the first 3 weeks of March it would have been natural to believe that the market was never going to stop going down. As you see below, it took just 23 days for the market to lose almost 25%. This pain, without an end in sight unfortunately led many investors to become emotional and exit their equity allocations.
*The S&P 500 Index is an unmanaged index of common stock performance. You cannot invest directly in an index. Indexes are unmanaged and used as a broad measure of market performance
On the flip side of the emotional coin, there are also those that are glad they stayed the course through March. Although it wasn’t your typical feeling of joy due to the damage that had been done in March, we fielded many calls from clients asking if they had missed the bottom. We find the only thing worse than losing money in the market is getting out before or at the bottom of the market and not giving your assets the opportunity to reflate in the recovery.
*The S&P 500 Index is an unmanaged index of common stock performance. You cannot invest directly in an index. Indexes are unmanaged and used as a broad measure of market performance
These emotional swings can be tough on investors. The feeling that your hot/cold streak may never end will test anyone. As I write this, equity markets are down around 10% for the year and truth be told we don’t know where the market will go from here. In my opinion, there will be consistent price adjustment, which will test investors to the up and downside until we see the true damage that COVID 19 has caused.
I leave you with a chart of optimism. Here are the last 19 major market events that can be categorized as crises. 12 months following these events the market was positive 16 out 19 times.. Nothing is full proof, however in the investment world I will take those odds any day. In closing, stick to your plan, be patient, and try your best to block out the never-ending cycle of news. As always, if you need anything don’t hesitate to reach out.
Sources: Columbia Management Investment Advisers, LLC and Ned Davis Research, Inc., 02/2020.