Many facilities are shut down in China in an attempt to stop the spread of the virus. This impacts stocks as many companies rely on China to produce their products and their consumers to buy them. As the virus has spread to Europe, the stock market’s response has also escalated. As we are writing this, the S&P 500 is down about 12.5% from its recent high on 2/19/2020. This is certainly a quick shot to the gut, but volatility of this magnitude is not uncommon for the stock market as we typically see declines like this once a year or so. You may remember, we had a drop of 20% in the fourth quarter of 2018.
We have been consistent in rebalancing portfolios as the stock market was running up because we know events like this do happen. It can be hard to “sell high” in times where it seems like the market only goes higher, but we know a successful investment plan requires discipline. Last September, we added positions in gold, real estate, and long-term bonds to many clients’ accounts increase the diversification of our investments. These asset categories tend to offer protection during periods of increased market volatility.
We are grateful for the relationship we share and are confident in the process we have taken to carefully select investments that will accomplish your objectives over time and withstand these tests.
We are closely monitoring the situation and have made additional adjustments to portfolios as we deemed appropriate. If your situation has changed, or you just want to chat, don’t hesitate to call or email us. Thank you for your continued confidence.