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Virus & Oil Concerns Bring On Bear Market

Virus & Oil Concerns Bring On Bear Market

March 12, 2020

As COVID-19 was announced a global pandemic, investment markets fell below 20% reduction from the recent market high. This officially marks an end to an 11 year bull market run.  At the outset of Wednesday's trade session, Goldman Sachs predicted the oncoming bear, but noted a significant recovery would be on the way later in 2020, as the financial impact of the the pandemic was made clearer.

With sporting events, large conferences, and theater events scuppered through the end of the month (to say nothing of the unprecedented 30 day travel ban to 26 European countries), we expect volatility on investment markets to continue to be wild.  I cannot stress enough that we continue to believe if your situation has not changed, nor should your plan.  Your cash savings will allow you to weather the current storm & participate in any recovery.

Here are the commentaries I am sharing today from our sub-advisory partners:

  • Over the last 50 years there have been seven bear markets  
  • SEI is not seeing these events as a reason to change long-term portfolio allocations. while losses may be significant, neither the virus nor declining oil prices represent typical catalysts for a recession (in their view).
  • Lower oil prices may have the silver-lining effect of reducing energy expenses for business and consumers, as the virus’ impact on markets fades.

 Dow’s Longest Bull Market Ends: What’s Next? -- Cetera Investment Management

  • What does a "Bear Market" mean to the U.S. stock market? Absolutely nothing. A bear market level is considered to be symbolic and not to have any relevance to stock market fundamentals.
  • Short-term downward pressure could continue: There are many unknowns about the causes and transmission of COVID-19 & the outbreak has affected both the supply and demand sides of the economy. 
  • Any reason for longer-term optimism: The economic impact of the outbreak could be limited to just the first and second quarters. Subsequent quarters might see an economic rebound as demand picks up and supply disruptions are rectified.
  • Another potential upside consideration: We could see fiscal stimulus in the form of a combination of one or more of the following: payroll tax cuts, an extension of the April 15 tax filing deadline, an expansion of paid sick leave for workers, and targeted support for the most-affected industries

Client Conference Call with BlackRock Tomorrow (3/13) at noon

Dial in by phone:

12pm Friday March 13

Call-in Number: (267) 930-4000
Access Code: 231-124-180

Should you not be available at this time, we intend to post a recording of the call to our website in the days following.

Please don't hesitate to contact us with any questions or concerns.