Please note, our office will be open without interruption and should you have any questions specifically or generally, we're available. We understand any concerns you have.
While we wish we didn't feel the need to send out any more commentary regarding the markets, this has been an unprecedented few weeks. As we type this, Most stock indices have declined sharply this year anywhere from 25-30%. The intensity of this decline appears to fall more in line with speculation, less with actual underlying fundamentals. Last week was a wild ride for the Dow Jones Industrial Average which played out accordingly:
Monday 3/9: -2,013
Tuesday 3/10: +1,167
Wednesday 3/11 -1,464
Thursday 3/12: -2,352
Friday 3/13: +1,985
With a week like that, and the volatile nature of the swings, it can be easy for investors to lose focus. Our responsibility as your advisor is to help you make the informed decisions with your money in both good times as well as challenging times. It is easy to want to let emotions set in and be reactive, which can lead to making choices you may regret in a year or two...or even worse - long term. That being said, we do not proclaim to "know the bottom" nor are we minimizing the effect on the economy of the current situation, but we do see light at the end of the tunnel. Below is Morningstar historical data illustrating U.S. stock market history downturns and the subsequent recoveries that followed. Following that is an illustration of one-year returns as well as 5 and 15-year annualized returns. Note that 73% of the one-year returns, 87% of 5-year and 100% of 15-year returns were positive. We share this because it’s powerful information that puts things in perspective for long-term investors.
From corrections, bear markets, even recessions come opportunities. Here's what we're doing now:
-Every single client account has been reviewed for their cash allocation. When appropriate we'll look to take advantage of this and increase stock positions when appropriate.
-Many of our clients have portfolios built with specific allocations to stocks / bonds and we will be re-allocating this blend to take advantage of depressed prices and keep our client’s risk levels in check.
-For clients with individual dividend paying stocks, we are allowing compounding to take effect and accumulating more shares at a lower price through reinvestment. We'll also be looking to upgrade these portfolios with the goal of purchasing companies we feel are suitable for your portfolio and offer a good long-term outlook.
We realize that markets like what we've experienced in the past few weeks are unsettling without question. While corrections like this can be stressful, they do happen. Usually the circumstances are unknown in advance, as is the case with the unique situation we now face.
Of course we welcome calls and emails and completely understand if any client has concerns. Please do not hesitate to reach out to discuss your personal situation and we’ll continue to keep you updated as we move forward.
Powers Advisory Group