March 2020 Market Volatility

As we write this at 12:00PM on Tuesday, March 10th, the S&P 500 is approximately 17.5% below its all-time high from mid-February. Yesterday, the stock market declined more than 7.5% in just one day. While we know that market moves to the downside are unnerving, they are also part of the long-term process of investing. Thankfully, days like yesterday are not routine, but they are also not unprecedented. Further, losses of -17% are not either. In fact, the stock market fell a little more than this in October, November, & December of 2018, just 15 months ago.

 In mid to late 2019, we began to proactively underweight our stock allocations given the significant market gains in 2019. Now as the market begins to retreat, we are looking to rebuild our stock allocations at better values. Yesterday we made trades in moderate and growth portfolios to increase stocks by approximately 3%. While we believe the market can continue to drift downward, we are well positioned to take advantage of better entry points and subsequent recovery of equity values.

 As an example, when the market turned up on March 9, 2009 (ironically 11 years to the day from yesterday) the first 10 days saw an increase of 22%, which was followed by an additional increase of 18% over the next three months.