February 28, 2020
Hello Clients, Friends and Partners of Arsenal:
This week has seen increased volatility in the stock market, as the number of coronavirus cases reported outside of China jumped. This weeks’ losses have taken us back to Fall 2019 levels for the S&P 500 Index and the Dow Jones Industrial Averages.
Every virus outbreak is different, but looking back at other major global outbreaks over the last three decades (SARS, bird flu, swine flu, Zika, etc.), we can see that the impact to the U.S. and global economies and stock market has tended to be short-lived. It’s possible the current outbreak has the potential to follow a similar path, but of course there is still significant uncertainty. The coronavirus has spread more quickly than SARS, the most comparable outbreak, but the policy response also has been more aggressive, and the survival rate has been higher.
To put this weeks’ decline into perspective, even in positive years for stocks, the S&P 500 historically has experienced an average peak-to-trough intra-year decline of about 11%. In other words, the S&P 500 has fallen 11% at some point during most years before ending higher. This latest pullback that we’re experiencing is in that range and it is currently within the normal range of market volatility. On average, the S&P 500 has experienced three to four pullbacks of around 5–10% per year.
As difficult as it may be to stay the course in the face of recent market volatility, a guiding principal in financial planning is to always align the timeframe of your investment with the timeframe of your goals. Short-term goals, like a home purchase in 18 months, should not be invested in stocks. Retirement goals, which are often 20+ year timeframes, will almost always face varying markets and economic cycles.
In our practice FINANCIAL PLANNING IS ALWAYS FIRST and our individual client’s needs are always evaluated before a penny is put to work. We are here and we are ready to guide our clients through this next chapter.
Please contact us at 781-335-9100 or reply to this email if you would like to schedule a phone review in the coming days. We’ll be checking voicemails over the weekend and will make ourselves as available as allowable.
Best,
~Doug Orifice
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of February 24, 2020.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
