Hi Clients:

Yesterday was another frightening day of steep declines in the stock markets, following more updates on the spread of the coronavirus and a surprise announcement over the weekend that Saudi Arabia would cut oil prices. The S&P 500 index of large US company stocks declined 7.6%, bringing year-to-date losses to 15.0%.  Our balanced, growth and aggressive allocations are down 6.4%, 10.0% and 13.0% year-to-date respectively. Remember that the S&P 500 was up nearly 30% last year, and your portfolios too had proportionately high returns. Markets fluctuate, and they go down when the news is alarming and the future is uncertain. Markets do not accurately reflect reality. We thought the following quote said this well:

“When there’s panic, there tends not to be accurate pricing of assets. The sell-off today to me is emblematic of that. It really is a knee-jerk reaction to what’s happened over the weekend.” - Kristina Hooper, Invesco’s chief global market strategist, interviewed yesterday by Bloomberg.

The S&P 500 is up 2.8% so far this morning. This extreme volatility will likely continue for the near future, but it will be reduced over time, and we are well-positioned to ride it out.  We remain confident in our mix of investments, and absolutely certain in our approach.

Please contact me if you would like to discuss in further detail.

Sincerely,

John