Broker Check

Market Volatility Update (April 20 2020)

April 20, 2020
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By now you should have received your first quarter statements. These statements likely showed a loss for the period. We know that seeing values go backwards is discouraging. We are here to talk you through your particular holdings and answer your specific questions.
 
On the upside, the values on your statements are several weeks old. We’re happy to share that despite the continued volatility of the market, your account balances have likely seen a lift over the past few weeks. So, your value today is very likely higher than the one on your statement. 
 
We encourage you not to focus on short term returns. Doing so often makes us lose sight of longer-term performance. As the chart below illustrates, the average Bull Market lasts many times longer than the average Bear Market. In fact, that’s why we measure Bull Markets in terms of years and Bear Markets in terms of months.
 
 
 
During times of uncertainty it can be very tempting to try to “time” the market: to move your money to the sidelines temporarily with the intent of moving back into the market when there is more stability. We’ve gotten lots of questions regarding this strategy.
 
While it may sound like a good idea, it is impossible to time the market – there are simply too many unknown variables. Historically missing just a few of the good days in the market can significantly impact your overall returns. The following chart illustrates this point: that “Time in the markets beats timing the markets.”
 
 
Last week we provided a timely example of this concept and it bears repeating here. March 23rd, 2020, has proven to be the market low point so far. On that single day, over $211 billion dollars were redeemed from mutual funds. News was dark and fear was rampant – there were lots of reasons to get out of the market. However, in the following 3 days (March 24, 25 and 26) the market rebounded 23% from these lows. If you were not invested you would have missed out on those returns.
 
It is our job as your advisors to help you focus on the long term. We are following markets closely on your behalf. We speak with our investment partners weekly to stay on top of daily changes within your portfolios. If you have questions, concerns, or if you want to review your strategies, we’re here to do that. 
 
*Past performance is no guarantee of future results.