Monthly Market Update:
Recap of March 2020
This past month has been one for the record books and not in a good way. The market downturn happened faster than we have seen before and the bull market we saw for the past eleven years came to an abrupt stop. Usually, when the stock market sells off and we step into a bear market, it happens gradually due to various reasons like slowing economic growth, lack of consumer confidence, inflation, higher unemployment rates and things of that nature. Instead, of the norm, we took an economy that was operating pretty normal and forced it into a recession.
It is hard to believe that is was just this past February on the 12th that the stock market was at a record highs. For the month of March S&P 500 was down 12.35%, the Dow down 13.62%, Nasdaq down 10.03%, MSCI EAFE down 13.35%, Barclays US Aggregate Bond down .59% and Barclays US Corporate High Yield down 11.46%. Long term treasuries have done well as investors fled to those as a safe haven. The Barclays Long Term Treasury Index is up 20.9% for the 1st quarter.
Currently, stocks are being driven down as investors are trying to price in the near future of each company’s value. At this time, company profits will be far less than the norm and many are operating at a loss. Once the bans are lifted and businesses are able to operate with a sort of normalcy, the markets should begin to recover. The challenge is predicting when this will happen. The longer businesses remained closed, the lower the market could potentially go, but if businesses are able to open sooner than is being predicted, we could quickly see a market upswing. In times like this, the urge to try to time the market may set in, but I encourage you to keep a long-term mindset and avoid this thought due to the dangers of selling low and missing the upswing.
In the short term, the government has stated they are willing to do whatever it takes to financially boost the economy. The $2 trillion stimulus bill and lowering the fed fund rate to zero are two ways the government has taken action.
As we continue forward, with all other market downturns, the market has come back and surpassed previous highs. This is a trying time for all, but I encourage you to stick to the financial plan and not make any rash decisions.
This is also a time when companies tend to prey on emotions. Be very careful that nobody is taking advantage of you based on the current economy. RightPlan Financial always works in your best interest and if you ever have a financial related question, be sure to reach out.
We will all get through this. Remember to stay the course, keep a long-term mindset and above all, stay safe.