With 1st quarter, 2020 market performance coming into view after the Easter Holiday, we want to offer a few bullet points for context in this swiftly changing market and the economic conditions in which performance in now on the books. Remember it captures only an arbitrary, freeze-frame in the larger scheme of things.
- As the stock market hit its lowest point to date this year in late March, 1st Quarter performance captures much of that downturn without reflecting historic gains posted since then.
- Ahead of the Easter weekend holiday the Dow and the S&P 500 both posted the biggest one week gains since 1974 and nearly as much as the all-time record going back to 1938.
- The Dow advanced 12.7% and the S&P 500 increased 12.1%.
- That takes the downturn to 16.7% on the Dow and 13.7% for the S&P 500 YTD.
- We’ve witnessed a three-week rally, built on quicker than anticipated monetary and fiscal stimulus implemented between Congress and the Federal Reserve.
- The S&P 500 is now 25% above its March 23rd low point.
Will the turnaround endure? We don’t know, but we’re confident even if there’s not another ‘leg down’, the next leg up will be no less bumpy than we’ve been experiencing. The ‘bulls’ envision plenty of ‘silver lining’ while the ‘bears’ will feast upon ‘gloom and doom’ until so much more is known.
We remain optimistic about raw numbers both from the standpoint of the virus and its devastation in contrast to what it might have become according to some predictions, and about the resilience of the US economic engine to repair and restore over the long run. What remains to be seen from the economic and market standpoint is just how much destruction will emerge overall and how quickly the US economy can rebuild from it.
As we watch developments around the health concern and for the market to anticipate the economic climb out of this crisis, we continue to manage the routine processes of maintaining global, multi-asset class investment strategies for our client accounts without any adjustments to those strategies and without attempting to implement ‘tactical’ moves.
Every crisis of this magnitude teaches us something new as each bear market is different than those preceding it. This, of course, becomes part of our increasing research arsenal. What we know from the many we’ve been through is that as long as capitalism remains, the markets will continue to go up and down on their way up. And that a global strategic multi-asset class allocations offers the most comprehensive defense against the bear markets still to come.
We look forward to climbing the next inevitable ‘wall of worry’ on the way back up from the hole this bear market will leave behind. Stay tuned, stay safe and stay healthy!