April 3, 2020 – Over the past weeks, developments in the health emergency and resulting economic and market impact have been sweeping. Although the market has experienced the fastest decline in history from a market high to bear market low, the percentage of the loss is not at all unusual for a bear market decline. For perspective, in late December 2018, the S&P 500 was sitting 18.9% below the mid-September high. The market recovered with a 31% gain in 2019 and we now finished the first quarter of 2020 down 19.6%, after reaching a -33.8% low the prior week.
The duration of this pandemic will be the greatest factor impacting the future of the markets. The length of the shutdown will determine the depth of the decline, the extent of the economic damage, and the amount of time it will take to recover. In the near future, we as a country will need a plan to restart the economy. This will require cautious decision making, reconciling restrictive measures essential for our health with the reality that the same measures are economically and socially unsustainable.
|
Market Total Returns (including dividends) |
Jan – Mar. |
|
Large Co. U.S. Stocks |
S&P 500 |
-19.60% |
Small Co. U.S. Stocks |
Russell 2000 |
-30.61 |
Foreign Stocks |
DJ Global (ex. U.S.) |
-23.68 |
U.S. Taxable Bonds |
BloombergBarc U.S. Agg. Bond |
+3.15 |
Commodities |
Bloomberg Commodity |
-23.29 |
Real Estate |
DJ U.S. Real Estate |
-24.39 |
The intermediate and long-term outlook is clearer and more encouraging. The United States has already deployed enormous fiscal and monetary stabilization measures. This is the largest stimulus since World War II, and we are likely to spend even more in the coming weeks. The stimulus will provide a much-needed economic boost, but it will also have a residual effect on interest rates, inflation, and asset prices going forward.
As investors, most of our invested dollars are part of long term strategies designed to achieve goals years or decades down the road. The current bear market will be part of history long before those dollars are ultimately used for their purpose. We encourage you to stay invested for those long-term goals. While the bottom of a bear market and perfect time to invest can only be seen in hindsight, the coming weeks are a prudent time purchase at discounted prices. Take advantage of low prices to buy quality investments on sale, and continue to fund your retirement plans and other long-term strategies.
Amid the current uncertainty of our world, we do have good news to share. You may recognize a familiar face at Nabity-Jensen: Jennifer Jorgenson has returned as our Planning, Operations, and Compliance Manager. Jennifer lives in Sidney, IA with her husband Jeff who farms there and their three sons Noah (18), Cole (16), and Carter (11). She is a sports fan and spends most of her free time cheering on her kids in their athletic endeavors. Her oldest son will leave for Central College in Pella, IA this fall; he will run cross country and track, while double majoring in business and biology.
Jennifer was previously with Nabity-Jensen from 2016 – 2018, and she took some time off to work closer to home before, as she says it, coming to her senses and coming back. She is a University of Iowa graduate with a degree in finance and brings with her extensive experience in banking, investments, compliance, and accounting. Her specialty, in addition to making sure things are running smoothly, is preparing financial plans for our clients. We are very fortunate to have such a valuable individual with us and I could not be happier to have her back. Feel free to reach out to her at (402) 391-1021 ext. 2, or by email at jjorgenson@nabityjensen.com. We value your business and are available for questions or comments anytime.