There is an old adage on Wall Street: the market goes up the escalator and down the elevator. Stock gains tend to be small, relatively steady things accumulating over years like we have experienced since the start of the bull market in March, 2009. Stock declines tend to be much quicker as markets respond to new information.
Coronavirus Ends the Bull Market
In this case, the coronavirus concerns and plummeting oil prices have caused the markets to drop like an elevator in unprecedented fashion, officially ending the 11 year bull market. This is the fastest onset of a bear market ever; that is, the fastest that the U.S. stock market has experienced a decline of 20% or more going back to 1915. The average number of days from peak to a 20% decline is 255, and the median is 156. The recent market selloff reached this dubious achievement in just 17 trading sessions. By contrast, the fabled 1929 market downturn took 36 sessions.
It appears that today will be another tough day for markets as the virus continues to spread and global growth slows. It will be difficult to watch and many investors will ask, should we get out now to avoid more losses? We suggest to not allow emotions to drive your investment decisions. Yes, these are tough times, but we believe in Inside Information’s Bob Veres recent comments: “It is not a good idea to sell when everyone else is selling, just like it isn’t a winning strategy to buy stocks when everyone else is wildly bullish. The best strategy is the ride out the downturn and experience the eventually subsequent upturn – which may come tomorrow, next week, next month or next year.” It’s time like these when having a high quality financial planner is priceless.
Health Accommodations at PDS Planning
For the health and safety of our clients and employees, we remind you that we are able to meet with clients in the office or via phone and screen share, if needed. Please keep this in mind if you would like to meet but are hesitant to come into the office.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.