Enclosed Article Link: https://www.capitalgroup.com/individual/insights/articles/handle-market-declines.html
We are experiencing some of the most dramatic days in the financial markets in recent history. Here are key data points from the recent market movements well as key investment fundamentals to remember as we navigate through this volatility.
Last week, COVID-19 brought a roller coaster to the markets, resulting in the fastest selloff from all-time highs and a steep rally in bond yields to record lows. The S&P 500 swung up or down more than 2.5% for four days straight as the US digested that the public health challenges we’ve seen in China and other parts of the world are now concerns for us as well.
Over the weekend, we received news that OPEC+ talks have collapsed and on Saturday, Saudi Arabia announced significant discounts to its selling price in an apparent price war with Russia. As an oil price war could have geopolitical consequences, the news pummeled markets already shaken by the COVID-19
Monday’s trading session brought historic one-day declines, with the S&P 500 closing 7.6% lower and DJIA closing 7.79% lower. Oil declined 24.59% to close at $31.13 per barrel – WTI’s second worst day on record, and the 10-year US Treasury yield (bonds have long been considered a “safe-haven” asset) closed down approximately 15 basis points lower to a yield of 0.559% while credit spreads widened as fears intensified that the spreading coronavirus will hurt corporate income and some companies’ ability to repay debt.
We are clearly seeing panic in the market and some economists and fund managers are now calling for a greater probability of global recession. In times like this, it is important for us to reflect on key principals of successful investing, as further detailed in the enclosed article from Capital Group:
- Market declines are healthy, and expected
- Time in the market matters, not market timing
- Emotional investing can be detrimental
- Make a plan and stick to it
- Diversification matters
- The market tends to reward long-term investors
Fortunately, our investment advisory process aligns to these key principals and, as a result, our clients are positioned well to weather market volatility to meet their long-term financial goals. We build our portfolios to meet your unique financial needs and with your time horizon and risk tolerance at top of mind. Many of our portfolios are tilted defensively and some of the more tactical strategies have elevated cash levels. These market conditions present a great time for us to discuss your financial plan and investment portfolios, especially if there have been any major changes to your financial situation.
Please reach out should you have questions or concerns – we would be glad to help you separate the news from the noise and make sure you’re making prudent financial decisions for the long-term. Thank you for allowing us to be your trusted partner to help you navigate through these turbulent times.
Your partners in wealth,
Kendra, Lindsey, Jessica & Aurora
Securities and Advisory services offered through Harbour Investments Inc.
Past performance doesn’t guarantee future results. The views and material presented in these materials were created and intended to provide background assistance and education. No product or service is offered in connection with the dissemination of this information, and no recommendation regarding the purchase or sale of any security is made, intended or should be implied by these materials.