What the Markets Are Telling Us

The markets are telling us that the Coronavirus situation and the aftermath of an economic slowdown is likely not going away any time soon. The evidence is in the “indiscriminate selling” of nearly every asset class:

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Data of the history of major market declines since 1926 – and their 1, 3 and 5-year aftermaths on average.*

  • Stocks in general (growth, value, technology, energy, transportation, leisure…)
  • Bonds (certain types more than others; low quality far, far more than high quality)
  • Gold (but net-net Gold is UP)
  • Oil and other commodities

Despite these bleak-sounding prospects, this is not a time for panic IF YOU HAVE A PLAN. (Although painful, I hear small sighs of relief.) Part of the plan I have with my clients is a process for adding to positions (buying) as prices have declined and if prices continue to decline according to our pre-established asset allocation guidelines. Cash levels, diversification and “rainy day” or “emergency funds” are the key “peace of mind” and necessary pieces amidst this process. Please call me to discuss or break down the principals of cash and diversification.

In the meantime, graphic above illustrates the history of major market declines since 1926 – and their 1, 3 and 5-year aftermaths on average.*

We will get through this crisis together.

* Past performance is no guarantee of future results. Periods in which cumulative return from peak is -10%, -15%, or -20% or lower and where a recovery of 10%, 15%, or 20% from trough has not yet occurred are considered downturns. There is no guarantee an investment strategy will be successful Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

 

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