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Monday Money Report

| March 30, 2020
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What a wild ride. The markets are on a roller coaster right now, and we expect that to continue for some time. On the expectation of the stimulus bill being passed, the markets surged, posting the largest gain since 1931.  Friday was down again, but not enough to wipe out the week’s gains. Overall, we are still at 2017 levels in the market.

I know it’s hard to be calm and objective in the face of such uncertainty.  We don’t know what is going to happen, but we do have some history that should provide some reassurance. We refer to the current drop in the market as an extreme selloff, meaning more than 90% of the stocks listed in the S&P 500 Index have dropped below their 200-day average stock price. Going back to Black Monday in October 1987, this is the 7th time such an extreme drop has happened in the market.  On average stock prices were up over 11% six months after the drop.  A year later, they were up 23% on average. Which is all a good reason to close your eyes and stay the course with your investments. 

 It’s also important to note that this is a different event than the financial crisis of 2008-09. That was a balance-sheet recession, meaning we were concerned with companies going under and failing completely, like General Motors did.  The current economic conditions are a liquidity issue, meaning businesses just need cash flow to get through this.  The Federal Reserve Bank here in the US, and other central banks around the globe, have all acted quickly and decisively to push liquidity into the market. Those actions, coupled with the recent stimulus bill, should help keep the current economic impact short, albeit painful. 

On a smaller, more local level, there is help available for both small businesses and the self-employed.  Part of the stimulus bill includes expanding unemployment insurance for 1099 workers and the self-employed. The SBA and the state both have loans and grants available.

Times like this act as a magnifying glass.  The jerks will be even bigger jerks, hoarding toilet paper and cleaning supplies.  And the vast majority of us will be singing in the trenches to encourage each other and lift others up.  America is the most generous nation on earth, and we are resilient. We’ll get through this together.

There’s a lot more information about the market on our website at www.covingtonalsina.com and our Facebook page, www.facebook.com/covingtonalsina.  We’re sending out emails with research and investment commentary, and you can sign up on our Facebook page for that as well.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.

And if you don’t have a financial advisor, or you haven’t heard from yours, come talk to us. This is Ann Alsina with CovingtonAlsina. 

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