Monthly Market Update:
Recap of September 2020
The third quarter of 2020 is over. For those ready for 2020 to go away, the great news is only one more quarter in the year, but the bad news is there is still one more quarter in the year. Wrapping up the year so far, both pessimists and optimists had wins in the stock market, or as we call them in the financial world, bears are pessimists and bulls are optimists. If this is your first time tuning in, I am Eric Powell, founder of RightPlan Financial and our young professional division, The Future Mill. Let’s dive into the stock market and see what has happened in the first 3 quarters of 2020.
To start it off, let’s look at the numbers. The S&P 500 was down in September -3.80%, the Dow Jones Industrial Average down -2.18%, Nasdaq down -5.10%, MSCI EAFE down -2.60%, MSCI Emerging Markets down -1.60%, Barclays US Aggregate Bond down -.05%, Barclays US Corporate High Yield down -1.03%, and Barclays Municipal up .02%.
As we all remember, the stock market started the year positive until the virus fear hit. For a few weeks, the markets continued to tumble at rapid rates as the news got worse and worse. Then, the rebound from the market sell off started and in August 2020 record highs were continuously being hit. For September, the market had a 10% drop. Now remember, anytime the market drops 10%, you will hear the market is in a correction, which is just what we saw. Though the market took a bit of a drop from highs, the trailing 12 months in the major US indices are still positive with the S&P 500 up 15.15%, Dow up 5.7% and Nasdaq up a whopping 40.96%. It is sometimes easy to look at short term numbers and daily volatility, but this causes unnecessary stress and I encourage you to have a long-term view and not stress daily numbers.
Your risk tolerance should have been tested quite a bit this year with the market swings. If you felt uneasiness that caused you to consider making a rash decision, we should sit down and consider how your portfolio is aligned. As with the first three quarters of the year, the final quarter is quite unpredictable. There are many factors that could affect the market positively or negatively, including the virus, a vaccine, the election, a government stimulus, third quarter corporate earnings, job reports and with the way the year has went, possibly an alien invasion.
In all seriousness, be sure to keep a long-term view and stick to your financial plan. If you have any questions or would like to consider re-evaluating your risk tolerance and portfolio allocation, be sure to reach out.