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February 2020

The global spread of the coronavirus has triggered a sell-off in our equity markets.  Indeed, it is not unreasonable to conclude that the virus could negatively affect economic growth as people stop traveling, going out to restaurants, etc., but it is no reason for panic. 

Equity markets are down over 10% as of the writing of this letter, which qualifies as a correction.  Historically, that happens about once a year.  The chart below shows how often various setbacks have occurred on average.  The important thing to remember is that all our portfolios are designed to withstand setbacks with consideration of your risk parameters.


 

Source: Capital Research and Management Company   1Assumes 50% recovery rate of lost value.  2Measures market high to market low.


Periodic declines are inevitable, and from a historic average the markets were a bit lofty at their recent highs.  In the end, it will all come down to earnings.  Most of us don’t like to see our portfolio values reduced, but that is just part of investing and we must resist allowing our emotions to affect our decisions.  We hope this reminder is helpful. 


SAVE THE DATE: Our next Client Appreciation Event will be on April 5th for UofA Baseball vs Stanford.  We will have the Clubhouse and easy access to the game.  We hope that you can make it! 


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.