Investors and money managers opened 2020 with optimism:
- U.S./China trade talks seemed to be making progress
- Interest rates were steady
- An 11-year bull market rolled along
Then a previously unknown virus – eventually named SARS-CoV-2 – jumped to humans and the Covid-19 pandemic brought the world economy to a standstill in, literally, a matter of weeks.
Between March 9 and March 31, 2020, U.S. Stocks fell so fast that numerous records were set:
- The S&P 500 posted a 20% loss for the quarter – the largest quarterly decline since 2008
- The Dow Jones Industrial Average lost 23% for the quarter – the worst since 1987
- The Nasdaq finished down 14%
And even while investors have shown moments of optimism in April, volatility remains high: On April 8, MarketWatch.com reported that in the previous 5 weeks, the S&P 500 had seen a 1% move 24 times, a run of uncertainty far exceeding the 2008 financial crisis and only seen before in the Great Depression crash of 1929.
What does this mean for the average investor? Ideally, your investment strategy has been created to factor in and weather bad news. This doesn’t mean you won’t experience losses, but it should mean that you have not lost:
- More than the markets have lost – If you’ve experienced far greater percentage losses than the overall market indexes, you may be invested in high-risk leveraged assets
- More than you can withstand before retirement – If you are nearing, or are at retirement and still have a significant percentage of your investments in equities, then your assets may not be properly allocated.
If you depend upon a broker or brokerage firm to help you manage your investments and have lost more than you should reasonably expect in this difficult market, you may be a victim of Stockbroker Negligence, or Stockbroker Breach of Fiduciary Duty.