Market Volatility in Perspective

Financial markets have been roiled recently amid fears over the impact of the fast-spreading coronavirus. These near-term disruptions to economic activity are the result of efforts to contain it. We see a downshift in 2020 global growth, with uncertainty around the size and pace of slowdown. While there are always unplanned risks, we do expect a rebound in activity once the disruptions dissipate and don’t see it derailing the U.S. expansion at this time.

What are key takeaways for investors? First, we encourage investors to keep things in historical perspective. Second, know the importance of staying invested and avoid reacting in ways that could derail long-term financial goals. 
 

Keep things in perspective

To provide historical context, the table below illustrates how the stock market responded during other past growth scares and bear markets. It also shows the period of positive market performance in the 12 months that followed these crises.

Stay invested

The chart below shows how a hypothetical $100,000 investment in stocks would have been affected by missing the market’s top-performing days over the 20-year period from January 1, 2000 to December 31, 2019. An individual who remained invested for the entire period would have accumulated $324,019, while an investor who missed ten of the top-performing days during that period would have accumulated $161,706.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
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Prepared by BlackRock Investments, LLC, member FINRA. This material is provided for educational purposes only. BlackRock is not affiliated with any third party distributing this material.

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Navigating A Market Correction

Corrections are anxiety-provoking.

They make us wonder if we got it wrong. If we’re going to be ok.

If this time is “different.”

After all, the S&P 500 plunged “at unprecedented speed,” and this was the “worst point drop in history.”1

Should we give in and get out? Sit on the sidelines until it all blows over?

No.

Market corrections are completely, boringly normal.

Whether it’s an epidemic, geopolitical saber-rattling, natural disaster, or a financial event, corrections happen regularly. They’re a natural part of the market cycle.

Here’s the historical take: Markets experienced 26 corrections between 1946 and 2018. On average, markets declined 13.7% and took four months to recover.2

To a long-term investor, a correction is a speed bump.

We can’t predict how long or how deep this correction will be, but we’ve been here before.

And markets have recovered.

Corrections are not something to panic about. Even when panicky headlines are everywhere. The 24-hour media cycle is all about stoking fears to draw eyeballs and shares.

The biggest mistake a long-term investor can make right now is to give in to the fear and make a big change in response to the selloff.

Emotional reactions to markets — whether it’s euphoria during a rally or anxiety during a correction — are deadly to long-term success as an investor.

It’s easy to answer a risk tolerance questionnaire and commit to a strategy when the market’s up.

It’s much harder to stick to the strategy when your portfolio drops. When it’s gut check time.

But you can’t reap the rewards of long-term investing if you don’t take the bad days along with the good.

We created your strategies to withstand turbulent markets. To pursue your long-term goals in all market environments.

We’re watching markets closely and will communicate with you if calculated changes to your portfolio are necessary.

Right now, we’d like you to do 3 things:

  1. Take a deep breath and remember that you’ve got a team of professionals behind the wheel.
  2. Trust the process. Remember the conversations we had about your goals and the reasons behind the choices we made together.
  3. If you’re experiencing anxiety, turn off the news, stay off social media, and go do something fun.

If you need a pep talk or to discuss your investment strategy, please reach out to your advisor. We’re here for you and happy to talk.

PFG Private Wealth Management, LLC
813-286-7776
www.pfgprivatewealth.com

1https://www.cnn.com/2020/02/28/investing/premarket-stocks-trading/index.html
https://www.cnbc.com/2020/02/27/stock-market-today-live.html

2https://www.cnbc.com/2020/02/27/heres-how-long-stock-market-corrections-last-and-how-bad-they-can-get.html

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. The S&P 500 is an unmanaged group of securities considered to be representative of the stock market in general. Indexes are not available for direct investment. The performance of the index excludes any taxes, fees and expenses. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.

What’s the Real Return on 12 Month CDs?

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.

S&P 500 Performance During Epidemics

After weeks of headlines about the coronavirus outbreak, markets have been caught in a volatile pattern of surges and retreats. Here’s what you should know:

Why are markets so volatile?

Disease outbreaks are hard to predict and come with a great deal of uncertainty that can make investors nervous—particularly after a period of record market gains.

As the epidemic spreads beyond China, investors worry that it could cause serious disruptions to trade and the interconnected global economy.

How long will the volatility last?

It’s hard to say. Though the human cost of an outbreak like Coronavirus is tragic, it’s unclear how

widespread the economic fallout will actually be. We can’t predict what markets will do, but this isn’t the first time we’ve grappled with market reactions to an epidemic.

Here are some examples from previous outbreaks:

Chart source: CNBC, Yahoo Finance

Though the past can’t predict the future, we can see that historically, markets reacted to epidemics with panic selling but recovered after the initial outbreak. However, epidemics don’t happen in isolation; the underlying economic and market fundamentals will influence how investors react long-term.

Pullbacks and periods of volatility happen regularly, for many reasons.

Whether the cause is an epidemic, geopolitical crisis, natural disaster, or financial issue, markets often react negatively to bad news and then recover. Sometimes, the push-and-pull can go on for weeks and months, which can be stressful, even when it’s a normal part of the market cycle.

The best thing you can do is stick to your strategies and avoid emotional decision-making. Why? Because emotional reactions don’t lead to smart investing decisions. The biggest mistake investors can make right now is to overreact instead of sticking to their strategies.

We’re keeping an eye on how the epidemic may affect our clients and will be in contact if adjustments to your strategies need to be made.

Have questions about your personal situation? Don’t hesitate to call our office at (813) 286-7776.

PFG PRIVATE WEALTH MANAGEMENT, LLC
www.pfgprivatewealth.com

Chart Source:

S&P 500 performance during outbreak:
https://www.cnbc.com/2020/02/24/avoid-this-investing-mistake-as-coronavirus-fearsgrip-the-markets.html
S&P 500 performance six months after outbreak: Yahoo Finance. 6-month performance between open of first trading day of the month after end of outbreak to adjusted close of final trading day of the sixth month.
SARS: April 1, 2003 – Sept 30, 2003
MERS: Dec 3, 2012 – May 31, 2013
Ebola: March 3, 2014 – Aug 29, 2014
Zika: March 1, 2016 – Aug 31, 2016

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

The Impact of Coronavirus for Investors

What we’re doing with our portfolios:

Public health outbreaks and epidemics like the recent coronavirus can quickly scare investors and, eventually, affect economies and businesses. The recent coronavirus outbreak has shut down airports, halted trade, and led to the rapid construction of new hospitals in China. The effects of the outbreak may push China’s economy into a period of slower growth, with stocks trading lower as investors seek protection.

So, what does that mean for the portfolios we run?

Key Takeaways

  • Looking at nine major outbreaks since 1998, there is little evidence linking global epidemics with long-term investment fundamentals.
  • The Chinese economy may slow, perhaps even meaningfully, but that is not a reason to invest or divest. Long-term investing is often best disconnected from short-term economic reactions, so we implore investors to maintain their focus on what matters.
  • Across the portfolios we run, we do have a relatively small exposure to Chinese assets (both directly and indirectly) but remain confident these holdings will deliver positive outcomes for long-term investors.

Rest assured our portfolio managers are closely monitoring your investments.  Please reach out to your advisor with any questions.

PFG Private Wealth Management, LLC