Broker Check

Market Update

| March 09, 2020

Today is March 9 (as of this writing), which happens to be the eleventh anniversary of the global panic that resulted from the “Financial Crisis” marked by the bottom of the bear market on March 9, 2009.

Isn’t it ironic that the world has elected to celebrate this anniversary with – you guessed it – another epic global market panic event.

At this morning’s opening level of 2,764, the S&P 500 was down over 18% from its all-time high, recorded February 19, 2020. Declines of that magnitude are fairly common occurrences. The average annual drawdown from a peak to a trough since 1980 is close to 14%*. But such a decline in barely a month is noteworthy, not for its depth but for its suddenness.

As we all know by now, the causes of this decline have been (a) the outbreak of coronavirus, the extent of which can’t be predicted, but is now present in our own community of North Fulton, (b) the economic impact of that outbreak, which is equally unknown, and (c) the past weekend’s global news, the onset of a price war in oil. (That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.)

The common thread here is uncertainty: we simply don’t know where, when or how these phenomena will play out. And the thing markets hate and fear the most is uncertainty. We have no control over the current uncertainty, but we can control how we respond to it.

Or, ideally, how we don’t respond. Because selling our stocks now is the last thing long-term, goal-focused investors like us should do even though we feel like we should do something. For as painful as it is in the short-term, we want to remind you to keep a long-term view.

The graphic** represents the U.S. stock market bull market these last 11 years. Is the line straight up? No, but it does trend that way. Notice the six short-term corrections that occurred along the way (the gray bars); we are now in the 7th. When we were experiencing each correction, it felt like the next recession was imminent, until it wasn’t. Each pullback was met with a full recovery; including the nearly 20% declines in both 2011 and 2018.

There is good news. We will get through this. You have:

  • A plan that takes market corrections and recessions into account.
  • A high-quality long-term portfolio designed to achieve your plan that likely includes fixed income to help manage your portfolio risk.
  • And possibly a cash allotment for protection and for your income needs during a down market.


If you want to talk about your circumstances, any changes that have taken place in your life, or about putting cash to work, please don’t hesitate - give us a call.

* JP Morgan Asset Management’s (Guide to the Markets, page 13)

** WSJBull Market Faces Tough Test as it Turns 11, (by Akane Otani, March 8, 2020)