Vince Lombardi once said, “It's not whether you get knocked down, it's whether you get up.”
There are many situations throughout our lives when we get knocked down. That’s admittedly part of life, but the challenge is the time, effort and knowledge we need to get back up. This same quote can be applied to our outlook of the stock market. Although it is challenging to determine when a recovery from this pandemic will occur… leading to a recovery of the economy and eventually the stock market, we remind you to focus on what we can control.
The suddenness of the health crisis is justifiably causing fear and concern. Each of us at Odyssey are right there with you spending our days doing all we can to stay healthy – staying home, keeping our distance if we need to be outside and washing our hands.
On the financial front, however, we still see the drop in the stock market as a temporary response to the impact coronavirus is having on our economy and our psyche.
Will we be ok financially? Yes. When will the market get better? We don’t know.
The White House Task Force tells us new coronavirus cases should trend downward in the coming weeks, at various times in different states/cities. Whenever that does occur, we will all still be impacted, but businesses and society will eventually be able to “open up” and ultimately allow us to get back to our normal routines. The economy should begin to recover then too.
The real question is… how quickly? The economic recovery could be a quick V-shape, a more-or-less normal U-shape or a looong U-shape.
As for the stock market, rebounds can happen quickly and unpredictably. Our guidance is to remain patient and benefit when the bounce occurs. It is important to acknowledge we can’t predict when it will happen (it may have already), and more importantly, we won’t know it happened it until AFTER it happened.
S&P 500 Bull Market Rebounds | ||
Start Date | 3 Month Return (%) | 1 Year Return (%) |
Aug 1982 | 26.6 | 59.3 |
Dec 1987 | 17.2 | 22.5 |
Oct 1990 | 7.7 | 33.6 |
Oct 2002 | 20.0 | 36.1 |
Mar 2009 | 38.8 | 70.6 |
Average | 22.1 | 44.4 |
Cetera Investment Management, Morningstar, Standard & Poor’s. Returns shown are S&P 500 total returns, which includes dividends.