This too Shall Pass
The last time I wrote to you was March 17th, the day we entered “bear market territory” with the S&P 500 down over 20%. Since then the market has gone down by as much as another 15% and is now bouncing around those two levels.
The financial media is narrowly correct, as far as that goes, in shrieking that there’s “no end in sight.” This is nothing more than a statement that no one knows where the bottom will be, and I’m certainly not calling one. I will point out that the market is hovering around its average post-WWII bear market decline of approximately 30% (obviously some more, some less). Historically, we’re in a zone of great opportunity for long-term, goal focused investors such as us.
Here are three investment observations I’ve learned throughout my career. (1) As prices decline, value increases. (2) The act of waiting for clear evidence of a market bottom ensures that you’ll have already missed it. And (3) when the market recovery begins, its initial trajectory historically tends to mirror that of the previous decline’s terminal phase (the first leg up is often as sharp as the last leg down).
If, over the course of 2019 any investor kept waiting for an opportune time to invest some funds only to watch the market go virtually straight up than this may be a golden opportunity for you.
In addition, you may have friends or family who have expressed some significant distress over the market’s current decline. I would be happy to talk with them to give them some historical perspective and some insight into my investment philosophy.
Finally, I’ll end with this:
Every crisis we’ve been confronted with we have overcome, and history will prove this one no different. It amazes me to hear national and local news stories about businesses from large to small who are chipping in to help in any way they can. From factories converting their operations to help with supplying healthcare equipment to local business around the nation donating what they can to help our first responders, medical workers, and those in need.
Due to the stay-at-home orders across our nation, our economy has basically been put into a medically induced coma. I don’t know when the recovery will begin or which way the equity market’s next 25% move will go. I do know which way its next 100% move will be. And that’s not me just being optimistic, if history is any guide, it’s a fact.
Thank you for your continued confidence in what we’re doing. I’m more convinced than ever that we are following the right strategy. And I’m always here when you need me.
This is being provided for informational purposes only, and should not be construed as a recommendation to buy or sell any specific securities. Past performance is no guarantee of future results, and all investing involves risk. Index returns shown are not reflective of actual performance nor reflect fees and expenses applicable to investing. One cannot invest directly in an index. DCH Wealth Management, nor any of its members are tax accountants or legal attorneys, and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional. The views expressed are those of DCH Wealth Management and do not necessarily reflect the views of Mutual Advisors, LLC or any of its affiliates.