To our clients and associates,
March 9, 2020 was the 11-year anniversary of the bottom of the Great Recession. On that day, March 9, 2009 the Dow closed at 6,470. Yesterday, 11 years to the day later, the Dow closed at 23,851.
This is a compounded average growth rate of 12.6% per year!
(As you know, I am required to remind you that past performance is not indicative of future performance. Loss of principal and/or loss of portfolio value are possible.)
So allow me this question please: If 11 years ago, you knew the Dow would rise at an average return of 12.6% per year, even though along the way there would be at least four nearly 20% collapses, would you have gone into the market? I know, I would. Here are the facts:
- During 2010 there was a 16% drop.
- In 2011, the Dow lost 19.4% at one point.
- The third quarter of 2018 saw a 19.8% reduction in the Dow’s value.
- As of yesterday, the market is about 19.3% off its all-time high last month.
The coronavirus is no doubt a very serious affliction for those infected, their families, first responders and medical personnel. That said, here are some thoughts to gain perspective.
- Tens of millions have contracted influenza this season. Over 10,000 people in the US alone have died from the flu this season.
- Worldwide cases of coronavirus total about 115,000 as of this writing and the world-wide death toll is about 4,000 - with 29 of those occurring here.
What should you do now?
If you are in the accumulation stage of life: Continue to add to your 401(k), your IRA and/or brokerage account and take advantage of a market that is on sale for 20% off.
If you are retired: Consider postponing large purchases, use local financial resources when possible versus selling into the downturn, and talk with us prior to withdrawing so that we can look at the most tax-efficient and cost-effective way to get cash into your hands. The bond portion of client portfolios has gained over the past month and this may be a prime source of available funds to consider.
We take our responsibility to you very seriously. We realize that for many of you, your life savings are under our care. Now is the time to remember that our portfolios are well-diversified and for the vast majority of clients, they include bonds, specifically US Treasuries and investment-grade bonds. This part of your portfolio is performing exactly as designed – it’s going up while stocks have trended downward. Most important, your portfolio is designed over the long term to handle the roller coaster events that we face each day in the market.
On a lighter note for those who look for a silver lining: Clorox corporation stock (yup, the bleach company) closed at an all-time high yesterday.
As always, if you would like to discuss your particular financial situation or the market with us, please feel free to call.
Past performance is not indicative of future performance. Loss of principal and/or loss of portfolio value are possible.