As the 1st Quarter of 2020 comes to a close the uncertainty of the spread of the new coronavirus is being felt around the globe, and it is unsettling on a human level as well as from the perspective of how markets respond.
At Bay Point Wealth, we believe in the fundamental principle that markets are designed to handle uncertainty, processing information in real-time as it becomes available. We see this happening when markets decline sharply, as they have recently, as well as when they rise. Such declines can be distressing to any investor, but they are also a demonstration that the market is functioning as we would expect.
Amid market swings, it is easy to lose sight of the potential benefits of staying invested over the long run. We can’t tell you when things will turn or by how much, but our expectation is that bearing today’s risk you will be compensated with positive expected returns. That’s been a lesson of past health crises, such as the Ebola and swine-flu outbreaks earlier this century, and of market disruptions, such as the global financial crisis of 2008–2009. Additionally, history has shown no reliable way to identify a market peak or bottom. This makes it extremely difficult to successfully time the market, meaning to get out at the top and back in at the bottom.
As part of the planning process and in developing an investment strategy for you, we consider a wide range of possible outcomes, both good and bad. Those preparations include the possibility, even the inevitability, of a downturn. We strongly believe that these preparations along with decades of financial science will lead to a successful long-term investment experience.
To read more about how markets performed in Q1, download the full Quarterly Market Report.