As I have previously reported, the stock market had been getting a bit extended, trading higher in spite of any and all potential risks. It was overdue for a pullback or correction. Many times when the market gets like this, it is some kind of catalyst that shocks the market.
The catalyst today is the spread of the coronavirus outside of China, with new cases in Asia (South Korea), Europe (Italy), and the Middle East (Iran) causing concern the virus could become less contained. This also increases the potential negative impact on the global economy.
While this may feel dramatic and scary, we have seen 10 other instances of sizeable one day declines just over the last 2 years (see chart below). In each previous case, the market eventually found its footing, recovered the decline, and went on to new highs.
as of 11:52am EST Monday 2/24/2020
Our neutral positioning in portfolios since the tail end of 2019 will serve to buffer your portfolio from this volatility. It also puts us in a good position to take advantage of better investing opportunities when the dust settles.
We continue to monitor this situation and the markets overall and will adjust as needed. Feel free to call us with any questions or concerns.
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