Our typical approach to market related communications is to provide perspective and reassurance when you need it most - during the middle of the storm, when markets have declined substantially, and investors are running for the exits (selling at the worst time). In consideration of the recent strong performance of the US Stock Market, the potential for high election year volatility, and the outbreak of the coronavirus, we decided to offer some proactive food for thought.

There is no shortage of uncertainties related to a host of topics including geopolitics, domestic politics (impeachment trial and election), viral outbreaks and the list goes on. Reports of “Breaking News” regarding uncertainties pop-up on our mobile phones, tablets, TVs and social media sites creating an echo chamber that repeats stories at nauseum resulting in fear, concern and confusion.  

As we’ve discussed during our scheduled client reviews, we anticipate a period of higher volatility during election years, and it’s likely we will experience short term declines, perhaps to a significant degree.  

Unlike political elections, there are occasionally events we can’t see coming. The recent outbreak of the coronavirus is an example that is top of mind for many. Although it is impossible to accurately predict the course of a virus or its impact on markets, history may provide insights worthy of consideration. The stock market’s reaction to past outbreaks and quickly spreading diseases was often short-lived, and positive within six months of the first occurrence (see chart below):
Similarly, equity performance across the globe averaged 3.1% in the ensuing three-month period after an epidemic, and 8.5% six months later (see graphic below):
It's impossible to predict the future with any degree of confidence or know what the market’s reaction will be in response to such health contagions, elections, geopolitics, impeachments, or the many other events that we don’t see coming. This has always been the case for investors. However, I am confident that the price of overreacting to short term shocks to the market and media hype, and being wrong, is high - as those who sold their investments in 2008 painfully know.
I’m proud of you. You've been very disciplined and patient through other challenging times and I continue to believe that our four best friends in investing are time, patience, discipline and diversification.
If you have any questions or concerns, or just need some reassurance, please do not hesitate to contact me or my team. We are here for you always and do everything in our power to enable your investment success and ensure you are living your BEST Life

Warm regards, 

Financial Independence
931 Jefferson Blvd
Suite 2005
Warwick, RI 02886

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