Genuine Wealth investment outlook – March 18, 2020

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Monday’s twelve percent decline in the broad US stock market was the largest single-day percentage decline since “Black Monday” in October of 1987.  The S&P 500 index is now down about 30% from its all-time high reached just one month ago, which makes this the fastest thirty percent decline in the history of the U.S. stock markets.

 

As you know, there are becoming more and more restrictions on our activities.  Some businesses are being forced to close and others are choosing to close.  We are seeing the beginning of an unknown duration of time where many businesses will see reduced profits because of lower productivity and/or lower demand for their services or products.  Reduced profits mean lower share prices.  Reduced share prices mean your investment portfolio goes down as well.  There’s no avoiding that fact.

 

Based on our research of past declines and the initial valuation of the stock market, we believe the most likely scenario is for total market decline of between 40-50% off the February highs.  Since we are already down 30%, that means we are already two-thirds to three-fourths of the way through the decline.

 

Although we don’t know exactly when the bottom will be reached, there will likely be a very quick rebound (surge) in stock prices based on some unexpectedly positive event.  Following that sudden surge, it could take several months before stocks get back to where they were in February of this year.

 

Neither we, nor anyone else knows the exact duration and timing of the virus related events that will unfold.  However, we do know we have been through numerous “storms” like this before and there is ALWAYS a resolution and the market goes on to make newer highs.  We also know you are concerned and, perhaps fearful right now.  We know you have entrusted us with the care and management of your money.  We know that you have hopes, goals and dreams for your life that revolve around your ability to fund them.  We take the responsibility you have entrusted us with seriously.

 

Our only objective is to provide the best, most unbiased financial advice to you.  We want to protect and grow your money and answer to no other stakeholders than our clients.  In that light, we believe the most prudent course of action is to stay invested and not attempt to time the market by trying to decide when to get out and back in.  We are optimistic and realistic at the same time.  We know there is more bad news to come, but we also know there will be a new dawn after the nightfall.  We will be by your side through it all.

 

Please feel free to contact us with any specific questions relating to your situation.

 

Our thoughts and well wishes are with you and your family during this historic time.


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