Weekly Market Commentary

March 16th, 2020

Stocks enjoyed their best day since 2008 and gained back a chunk of Thursday’s steep losses after President Trump declared a national emergency to combat the coronavirus. Although the indexes spiked over 9 percent on Friday, they still suffered serious losses for the week. For the week, the Dow fell 10.24 percent to close at 23,185.62. The S&P lost 8.73 percent to finish at 2,711.02, and the NASDAQ dropped 8.14 percent to end at 7,874.88.

Returns Through 3/13/20
1 Week
1 Year
3 Year
5 Year
Dow Jones Industrials (TR)
NASDAQ Composite (PR)
S&P 500 (TR)
Barclays US Agg Bond (TR)

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

Half as Much — The total return for the S&P 500 over its 11-year bull market (i.e., March 10, 2009, through March 6, 2020) was a gain of 16.8 percent per year (total return). If you missed the 20 best percentage gain days over the 11-year bull run (i.e., 20 days in total, not 20 days per year), the 16.8 percent annual gain is cut in half to an 8.5 percent annual gain. There were 2,768 trading days over the entire 11 years (source: BTN Research). 

All Were Up — The average single-family home in the U.S. appreciated in value by 5.1 percent in 2019. Idaho (12.0 percent) and Utah (8.1 percent) experienced the greatest home appreciation, while Connecticut (1.9 percent) and Illinois (2.0 percent) reported the smallest gains nationwide (source: Federal Housing Finance Agency, BTN Research).

Yikes — The U.S. government’s national debt total is forecasted to reach $30.6 trillion as of Sept. 30, 2030. The national debt was $20.0 trillion as of Dec. 31, 2016, and is $23.5 trillion today (source: Treasury Department, BTN Research).

WEEKLY FOCUS – Is It Time to Fear Fear?

While access to 24-hour news is a convenience we’ve come to rely on, it can also feed our worst fears – as one negative headline after another screams at us. Maybe that’s why fear seems to spread more easily than optimism, especially in the economic arena. As the old Wall Street adage observes: “The market goes up the escalator and down the elevator.” Stocks typically increase in value at a fairly slow, steady pace – until troubling news panics investors and stocks plummet.

While recent market volatility has tested the mettle of the most seasoned investors, there are still reasons for hope. On March 11, the Director-General of the World Health Organization said the Coronavirus pandemic is the first that could be controlled with ideal responses since 90 percent of all reported cases were in just four countries at the time.

The markets have rebounded quite quickly from several viral outbreaks in the past. For instance, according to Dow Jones Market data, the S&P 500 had gained 14.59 percent six months after the first occurrence of SARS and 20.76 percent within 12 months. The S&P’s six- and 12-month increases after the 2009 Swine flu epidemic were even more dramatic. The index enjoyed healthy rebounds after the MERS epidemic in 2013, Ebola in 2014 and Zika in 2016.2

It’s also wise to remember you haven’t actually realized losses if your money remains invested. Historically, stocks have risen over the long term, despite periodic downturns. In most instances, younger investors can afford to ride out volatility until the market recovers. Some may even choose to purchase additional equities when prices are low.

Understandably, corrections and bull markets are particularly stressful for individuals planning to retire soon, who don’t have time on their side. If they haven’t already, they should check their portfolio to see how much of its assets are in conservative funds or cash. Investors who may not have enough funds in fairly liquid investments might want to delay retirement or talk to a financial services professional about selling enough equities to cover a year of living expenses.

As always, I am monitoring the market conditions. But please give me a call if you’d like to review your portfolio, assess your current situation, evaluate your risk level or discuss concerns.

1https://www.weforum.org/agenda/2020/03/coronavirus-is-official-a-pandemic-but-we-can-change-its-course-who-briefing/   2https://www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-outbreaks-as-chinas-coronavirus-spreads-2020-01-22


This commentary brought to you by J. Graydon Coghlan, CRPC
and the team at CFG Wealth Management, Inc.
4370 La Jolla Village Drive, Suite 630 San Diego, CA 92122
Phone: (858) ­550-3960 Fax: (858) ­550-3969 Toll Free: (800) ­884-5121

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright January 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2996961.1

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