Handling the Hard Times

March 13, 2020

Yesterday, the market continued its nasty descent.  Not only was it a bad day, it turned out to the be the 4th worst day in Dow Jones history, falling by -9.99% in a single trading day.  Travel restrictions, continual event closings, and other matters weighed heavily on the minds of investors.  The Fed attempted to step in, but much like their emergency 0.5% rate cut of last week, investors cheered for a moment then returned quickly to negativity.

As you can see below, this has been a wild point ride for the Dow since the peak a few short weeks ago:

What started as a virus in a Chinese fish market has turned into a global pandemic.  And while the medical measurement of how far this will go can’t be determined with any certainty right now, people and businesses are reacting.  Whether mandated isolation or just social separation, choices are being made to try to slow the potential spread.  While these actions can slow the spread, they are also having a direct impact on slowing the economy which is what has caused this volatility.

It’s easy to look back and label this downturn as obvious.  I’m sure you, like many, may have thought the market was “due” or was “high” at some point in the past.  Did you think it exactly on February 19th at the peak?  Probably not.  And if you did think it before, you probably thought it many times before.  After all, the Dow hit 114 highs between 2017 and the peak in 20201.  The markets, while rising, hit all-time highs all the time.  The problem is knowing which high is the final one before the decline.  That’s the feat which over time has proven impossible to know with foresight.

Even so, we as people like to do things.  When things feel uncontrollable, we try to do anything to assert control in our lives.  A popular outlet for this right now?  Stocking up on supplies.  Have you noticed the Costco parking lot lately?  It’s even more crowded than usual and it’s not even a sample day!  That has carried over into market performance.  Costco’s stock has outperformed the Dow by just shy of 20% over this decline.

Markets can feel uncontrollable.  Markets have risk which must be there in order to get the return that comes with the market over time.  As the old saying goes “No pain, no gain.”  While the uncertainty and lack of control feeling is tempting to act on, we know that’s not the right thing to do.  Bad days like yesterday can be tough on the stomach, but if that type of day forces you off a sound strategy, then investment history has something to show us.

As you can see here, if you miss the best days of the market, you can really fall behind.  What’s harder?  Historically many of the best days are clustered right around the worst days.  So, you can’t just wait until things calm down out there to get back into stocks.  By staying invested, through good and bad, you end up in a far better destination.

We’ve seen a lot since being in business since 1986 (the worst day ever for the market was the following year), and know that acting carefully with attention, strategy, and discipline is the way to go.  The strategy has been proven time and time again, regardless of what different thing has caused a downturn.  Higher ground will be found and we’re here to bring you there.

BDF Preparedness

While the Coronavirus (COVID-19) continues to be discussed in our communities, impact events, gatherings, and workplaces, we want to assure you that BDF is fully prepared to assist you through any disruption. We have the technology in place and have tested our abilities to continue to serve you. We remain focused on how we can help you during this difficult market environment.

The health and safety of our team and you, our clients, is of the utmost importance. We have directed our team to schedule meetings via phone or video conference. Please reach out with any questions, we are here for you.

For more information related to how the markets are being affected by the Coronavirus:

Coronavirus – The Market Says It’s Supposed to Get Worse

Coronavirus and Market Volatility Revisited

Coronavirus Uncertainty Leads to a Bear Market

Thoughts on The Downturn


1 Data from thebalance.com/dow-jones-closing-history-top-highs-and-lows-since-1929-3306174
The Dow Jones Industrial Average (DJIA) is a price-weighted index in the United States that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ.
The S&P 500 Index includes a representative sample of the largest 500 companies in the U.S.

Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk.  Future performance of any investment or wealth management strategy, including those recommended by Balasa Dinverno Foltz LLC (BDF), may not be profitable, suitable for you, prove successful or equal historical indices.  Historical indices do not reflect the deduction of transaction, custodial or investment management fees, which would diminish results.  Any historical index performance figures are for comparison purposes only and client account holdings will not directly correspond to any such data.  BDF clients must, in writing, advise BDF of personal, financial or investment objective changes and any restrictions desired on BDF’s services so that BDF may re-evaluate its previous recommendations and adjust its investment advisory services.  BDF’s current written disclosure statement discussing advisory services and fees is available for review at www.BDFLLC.com or upon request.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from BDF.