Will There Be A Recession?

The past several weeks has seen the first pandemic in the era of social media. The last H1N1 Influenza pandemic was in 2009. In 2009, Facebook was young (founded 2004) and Twitter was in its infancy (founded 2006).

In addition to a handful of other major factors, the Covid-19 coronavirus is descending on the planet during: a US Presidential election year, a high-level fight over oil between the Saudis and Russia AND immediately following an almost 11-year UP stock market in the US.

In short, the US stock markets have now entered a “Bear Market” which is defined as a decline of at least 20% from a recent high. The US is not experiencing market losses alone. In Europe the stock markets are down even further. Recession is still speculation but likely. Coming months will tell the severity country by country.

In times of volatility, there are measures such as rebalancing and buying on weakness that can be employed with discipline. Market data shows that ON AVERAGE EVERY YEAR SINCE 1980 the S&P 500 experiences a decline of 14% from the high of the year. EVERY YEAR. This year so far is obviously above average.

We take our clients’ portfolios – and lifestyles – seriously. Please stay in touch as we are here to put the markets and your portfolio in perspective.

Below is the data showing: RED DOTS are the intra-year declines year-by-year since 1980. GREY BARS are where the market finished despite the volatility. Note 2008 and the following year, 2009, especially.

JPM Graph

Graphic Explained:

Market data shows that ON AVERAGE, EVERY YEAR SINCE 1980 the S&P 500 experiences a decline of 14% from the high of the year. EVERY YEAR. 14% is the AVERAGE. This year so far is obviously above average.

 

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