If you have kept an eye on Wall Street in recent months, you may have seen this moment coming. Investors have been discouraged by a hawkish Federal Reserve, a U.S.-China trade war seemingly far from a truce, and a widespread perception that global growth is slowing. On Christmas Eve, many stock indexes fell into Bear Market territory, meaning the index closed more than 20% below its all-time high.1
How long could this bear market last? That is unknown, but if history is any guide, it could persist across 2019. Examining the bear markets seen during 1946-2009, the average length was 13 months, with an average dip of 30.4% from an S&P 500 peak.2
What actions should you consider now? None. We developed your current strategy based on your risk tolerance, time horizon, and goals. Part of that approach took into account that the financial markets may have a period of lower prices. You can be certain that our firm is monitoring the economic and political landscape to see if there are any major shifts that may cause us to consider making a change to your portfolio.
What portfolio changes will take place this quarter? Based on our team’s recent analysis of the market, all first quarter model updates will reflect an increase in asset diversification – such as the inclusion of commodity and currency fund exposure – and a focus on more value-oriented and lower risk investments.
Overall, if you have any questions or concerns at this time, please don’t hesitate to call. Also, if you have learned of any life changes over the holidays, such as a wedding or a birth, please let us know. We may want to consider making changes to your overall strategy.
Financial Advisors Terence Reed, Beth Marshall, Melissa Rubingh, and Ryan Cohen
Diversification does not guarantee against loss or ensure a profit. It is a method used to help manage risk. This material was prepared by MarketingPro, Inc. for use by Terence Reed, Elizabeth Marshall, Melissa Rubingh, and Ryan Cohen.
1 – washingtonpost.com/business/2018/12/24/trumps-white-house-tried-calm-markets-it-backfired [12/24/18]
2 – cnbc.com/2018/12/24/whats-a-bear-market-and-how-long-do-they-usually-last-.html [12/24/18]