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Steadfast Points

  1. Regular readers of this blog likely know that we do not rely on the accuracy of the media and financial journalism when it comes to the markets. Further justification (not that we are looking for any) comes to light in (this chartput together by the Hartford Funds titled, “Resisting the Urge to Panic.” The two primary things to focus on is the red line which represents equity mutual funds – outflows from 2007 to 2019. The lightly shaded area that looks like a background is the performance of the S&P 500 Index over the same time. Why would the outflow of funds from growth-oriented vehicles decline over such a long period of time when the S&P 500 Index had an average annual return of 16%?  
  2. So, what if the market does go down again from here? Of course, there is no way of knowing the direction of the markets in the short-term given that the S&P 500 Index dropped 34% in 33 trading days from the Feb 19 high to the (so far) low on March 23. Here are a few steadfast points worth considering as you revisit your investment strategy. a) When stock prices are going down, the enduring value of the underlying companies is going up. b) Staying fully invested during temporary market declines is the only sure way to capture the entirety of the market’s permanent advance. c) You never try to make long-term investment strategy out of short-to-intermediate-term disruptions. d) Perhaps more today than ever, bonds, CDs and the like are not an alternative. Have we hit the bottom of this market? No idea – nor does anyone else know the answer. But from the low on the S&P 500 Index on March 23 to the May 11 value of 2930, the index has rebounded 31% (without dividends) marking the YTD decline to just over 9%.  
  3. History can be quite fascinating with endless stories as we look back to the World Wars, the Civil War or even the Revolutionary War. But an internet search on the Pangea (i.e. - land mass on earth 300+ million years ago), Panthalassa (i.e. - water mass in the same historical period), or Pangea Proxima (i.e. - possible future config of the earth), time takes on a very different meaning. If you  click here , the map and brief explanation compiled by Massimo Pietrobon is quite impressive. This makes our current pandemic – real and painful as it is - seem like a-blip-in-time in a broader perspective. 

FourThoughts – Jim Butler, CFP®, AIF®

FourFront Advisors LLC

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