Today I’m thinking of a famous poem by Rudyard Kipling – IF
If you can keep your head when all about you are losing theirs…
If you can think – and not make thoughts your aim…
Yours is the Earth and everything that’s in it.
The market is experiencing a significant decline precipitated by the coronavirus and it’s potential economic impact and now exasperated by a looming oil price war started when OPEC and Russia couldn’t agree on production cuts over the weekend.
A situation like this is exactly why we preach diversification in portfolios. While diversified portfolios don’t give you all of the upside in a year like 2019, they mitigate the downside in times like this. In addition, we have been reducing risk in client portfolios over the last 2 weeks, to further reduce the impact of the current pullback.
It’s also important to keep in mind that while the coronavirus is unprecedented, the market reaction is not. Recall as recently as the fall of 2018, the stock market (basis S&P 500) had a 20% decline from the all-time high it hit on 9/20/2018 into the low in 12/24/2018. The market then proceeded to go on a steady climb during 2019 of 28%.
As I write this note (10:16am EST) the current pullback is approximately 17% from the previous high reached on 2/19/2020.
Our diversified strategies and recent portfolio adjustments mean we are experiencing much smaller declines. We will continue to make adjustments as the situation dictates.
Please reach out to us if you have specific questions or concerns.
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