3/12/2020 Update

The stock market has entered a bear market with a drop in the S&P 500 of over 30% from its recent high on February 19th. This is the quickest start to a bear market in history with it taking just 16 days to get there. As a comparison, the 2008 bear market took 188 days to drop more than 20% and become an official bear market.

There have been 16 bear markets since 1896 in the US. According to Dow Jones the average duration of those bear markets is 146 days and the average time it takes to go from the low to exiting the bear market is just 63 days. Bear markets can certainly end just as fast as they start.

Will this bear market end as quickly as it has started? Only with hindsight will we know the answer to that. But I do know that going into this bear market our economy was the best it has ever been as measured by GDP and unemployment rates. We have had an unprecedented bull market lasting 11 years and an economy that exceeded most predictions over the last decade.

The coronavirus will certainly decrease spending and economic activity over the next 6 to 12 months likely resulting in a recession and many jobs lost. However, a potential positive is that unlike many other problems the US has faced in history there is a known path to resolving this problem. Whether it is this year or next scientists and doctors will develop vaccines and treatments to prevent or help treat the virus. They are already testing such vaccines but it will take time to create and disseminate to the public. Add on top of that as more people have become infected the spread of the virus will likely slow as there will be what doctors call herd immunity. That is why every year your doctor tells you to get a flu shot. It is not just to protect you but to also protect the rest of the community.

Finally, a little perspective is needed in regards to the market. With the S&P 500 down 30% that puts us back to where we were in December of 2018. Certainly not good news but a loss of 14 months worth of returns out of an 11 year bull market shouldn’t be a game changer for anyone.

As always, I am available if you have questions regarding your account or portfolio.

Steve Conkin, MBA, ChFC, CFP

steve.conkin@conkinfinancial.com

405-348-6200