Coping with market volatility

Coping with market volatility

Happy Saturday. I hope you’re keeping well and safe from the COVID 19 outbreak.

One of the hardest aspects of this crisis is this social distancing required between you, me, friends, neighbors, colleagues, even our families! My kids have not visited their grandparents for weeks.

But we have to stay connected…even as we socially isolate. In this email I want to give you an update on the markets and your investments.

March has been a difficult month for investors. Since the February 20 peak, the stock markets both in the US and here in Australia have shed over 30% to its most recent lows. That’s roughly in line with the historical average bear market pullback, with bear markets being defined by at least a 20% sell-off.

However, this doesn’t mean we’re out of the woods yet. Market volatility is unlikely to abate until we see the following:

  • A peak in new cases here and around the world and subsequent decline.
  • An effective treatment and vaccine.
  • Clarity on the economic data. What will be the impact of the lockdown on the economy?

One thing I want you to remember as you watch the markets and the news: Your investment portfolio has been built with the anticipation that we will experience one and more bear markets along the investing journey.

This is a market storm…a temporary event you and I have long prepared for by setting investment objectives, making smart and responsible decisions about allocating assets and diversifying holdings. We based your portfolio on time tested investment strategies that have protected investors for many years.

I understand that what is happening is unprecedented. We are in the midst of an economic and health care crisis. Both breed fear and uncertainty.

But I am confident this pandemic eventually will pass, and the markets will resume its long term upward trend again. And you as the investor will be rewarded for bearing the risks (i.e. volatility) we’re experiencing now.

If you have questions or concerns, please reach out to me. I’m always available for a chat.