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Misery Loves Company



Given the abundance of "news" available today, I am sure you heard the stock market has declined more than 10% from recent highs over fears related to coronavirus. Nobody knows how far this fear will extend or how much stocks will fall in response. A drop of this level is known as a "Market Correction" which sounds harmless but is nonetheless painful to experience.

To put this in context, see the chart from First Trust which highlights the performance of the S&P 500 Index following the start of recent epidemics. The chart begins in 1980 and as you can see, the average 12-month return following the crisis was positive in 9 of 11 cases.

Epidemics and Stock Market Performance

If you follow your account closely, you may have noticed that we have used this decline to rebalance, selling safe-haven assets (like Treasuries and gold that have performed well) to reallocate to the stocks that are suddenly 10% cheaper than they were recently. As John Maynard Keynes once wrote, "Patience is a luxury that individual investors can afford." The decision to reallocate may not look good in the next 3-6 months if the decline continues, but if history is any indication, it may look very good over the next 3-6 years.

The late John Bogle, founder of The Vanguard Group, said the question isn't whether your investments will go up and down in value, because this will inevitably happen. Rather, he said, the question is, "will the fact that investments go up and down bother me enough to do something dumb?" If you would like to read more about market declines, you may also want to take a look at my piece titled, "The Importance of the Long Run" which I published during the downturn in late 2018.

Remember, I am here to help you stay the course with the long-term investment strategies we developed together. The market has downturns which are really the price we pay for long-term returns. This isn't the first one we've seen and certainly won't be the last. I am happy to answer the tough questions and help you make the right decisions for your long-term success. As you know, I invest alongside you and I would encourage you to give me a call whenever you would like to commiserate. After all, misery loves company.

If you have questions or if you would like to discuss the markets with me, you can e-mail me at mhaertzen@wtwealthmanagement.com or call (520) 204-1058.

Sincerely,

Matt Haertzen
Matthew J. Haertzen



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