Muddy Shoes
I recently snuck in my last trail run prior to the City of Carlsbad closing our local park. It was right after a rain and candidly, my mind was moving quite fast as I navigated the muddy terrain. Like many of you, adjusting to COVID-19 has offered both challenges, and, a once in a lifetime opportunity to have extended time to think about what is most important in life.
As I approached a familiar turn on the trail, I was met with 20 yards of deep, wet mud. Next to this particular part of the trail was a conveniently located concrete barrier separating the road from protected vegetation. Standing approximately 3 feet high and stretching just the right length to cross, the barrier offered an opportunity to hop up and balance across to avoid submersion into the mud. Not willing to “slow down” my pace, I quickly jumped up on the barrier and taking 3 steps, hopped right into the mud! I tried again, same result. My third and final attempt had, you guessed it, the same result. Three strikes, I’m out. I walked through the mud and continued on my run with some extra weight on my shoes.
When I made my turn back, I knew I was going to have to cross the same area again. I remember I was listening to Maverick City Music’s song “Refiner”. The lyrics were hitting me hard. “I want to be tried by fire, purified. You take whatever you desire, Lord here’s my life”. I realized on that run that throughout this pandemic, I had been trying to control just about everything. Trying to control the stock market, when the economy would “open back up”, how my wife thought about the pandemic, you name it.. I was feeling I had the divine ability and responsibility to make everything “right”. Boy, talk about giving yourself a lot of credit! I realized in that moment, it was time to let go of control. It was time to be patient, listen well and serve my family, friends and clients to the best of my abilities.
When I came up to the section again, I decided to be patient and take my time. I carefully propped myself up on the barrier and made it across, first try! No fall into the mud this time around, the patience had paid off.
Investing during turbulent times requires an enormous amount of patience. I can remember going to Magic Mountain as a kid and being on the rollercoaster Colossus for the first time. I remember thinking “let me off this thing!” It moved quickly and was an old coaster. It literally sounded like the wood was going to fall apart as we went along! In the end, Colossus ended up being my favorite ride at Magic Mountain. What a thrill!
With stocks now in a Bear Market, opportunity abounds. I believe we’ll get through this downturn and those that were able to stay on the “Market Colossus” will be happy they did so. Additionally, investors who step into the market while it’s down could be rewarded if they keep a long-term vision.
Please be sure to watch my upcoming videos as I will be providing perspective, insight & strategy as we navigate these uncertain times together. In the meantime, stay hopeful and never let go of the vision for better days ahead. If you haven't already, please subscribe to my YouTube channel!
Positive Quote:
"Never let your stage outsize your soul.”
- Chuck Olson, Founder of Lead with your Life
Fun Fact
Dylan, Ryder and Maverick (our boys) created their first stock portfolio consisting of 10 companies. They each have the responsibility of tracking daily prices on the stocks they are “covering” as analysts!
The Markets
First Quarter through March 31, 2020
The world's economies and stock markets have been rocked by the spread of COVID-19. Investors' fears prompted a major sell-off in February and March, plunging stocks well below their 2019 closing marks. Nevertheless, 2020 started off in a positive way. Following a strong 2019, stocks were slow to move forward as investors cashed in some of their 2019 gains. But by mid-January, each of the benchmark indexes were safely ahead of their 2019 closing marks. However, concerns over the COVID-19 outbreak in China quelled investor optimism. By the end of January, only the small caps of the Nasdaq remained ahead of their prior year's pace, as each of the remaining indexes listed here fell into the red.
February started off as January ended, with investors more inclined to sell rather than buy equities. However, word of China's plans to cut tariffs on some U.S. imports sent stocks higher during the second week of the month. The Nasdaq was more than 6% over its 2019 year-end value while both the S&P 500 and the Dow also pushed ahead. But by the third week of February, the impact of the virus was becoming evident with news of a widespread outbreak in South Korea. Selling accelerated the following week as outbreaks were reported in Iran and Italy. As more cases were reported in the United States, investors feared that containment of the virus was not likely and rushed to cash in stocks. By the end of February, each of the indexes lost significant value led by the Dow, which fell more than 10% for the month.
March 2020 will surely go down as one of the most turbulent months. COVID-19 continued to spread worldwide. In the United States, confirmed cases and, unfortunately, deaths spiraled. Fear became the motivating factor in our daily lives — fear of catching the virus, fear of the illness affecting our loved ones, fear of losing our jobs, fear of economic failure, and fear of losing our money. With respect to the stock market, this fear manifested itself in a major sell-off for most of the month. After falling sharply during the last week of February, stocks rebounded marginally to open the month. But that push was short-lived as stocks plummeted dramatically mid-March, despite the announcement of new actions and legislation by the Federal Reserve, Congress, and the President. On March 20, each of the benchmark indexes listed here posted double-digit losses. Year to date, the major indexes were more than 20% behind their 2019 closing values. The passage of the CARES Act at the end of the month helped ease investors' concerns enough to move back to stocks. The end of the month saw each of the benchmark indexes post major gains, with the Dow marking its best single day since 1938. However, the spike in index values was not nearly enough to offset the major losses sustained throughout the month. March saw the Dow fall almost 14%, the S&P 500 drop over 12%, the Nasdaq lose 10%, the Global Dow give back close to 15%, and the small caps of the Russell 2000 plunge nearly 22%.
The first quarter of 2020 closed with each of the benchmark indexes securely in the red compared to their 2019 year-end values. The Russell 2000 again suffered the largest three-month fall, closing the quarter down nearly 31%. The Dow suffered its worst quarter since 1987, while the broader-based S&P 500 hasn't seen a quarterly decline this bad since 2008. The Nasdaq fell more than 14%, marking its worst quarter since 2018. The Global Dow fell over 24% for the quarter.
By the close of trading on March 31, the price of crude oil (WTI) had sunk to $20.35 per barrel, well below the February 28 price of $45.19 per barrel. The national average retail regular gasoline price was $2.120 per gallon on March 23, down from the February 24 selling price of $2.466 and $0.503 less than a year ago. The price of gold finished March at $1,591.20, slightly higher than its February closing value of $1,585.80.
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Eye on the Month Ahead
Individuals' health is of primary importance as the world continues to battle the effects of COVID-19. Of secondary, but great importance, is the impact of this pandemic on the world's economies and markets. April will, hopefully, begin to point toward recovery of both personal and economic health. The impact of the CARES Act should begin to be felt by individuals and businesses next month.
Data sources: Contribution provided by Forefield. Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.
I look forward to continuing to guide clients through 2020 and beyond. If you have a friend or family member that you think would benefit from working with me, please don’t hesitate to make the introduction. Thank you for your trust and business.
