Dear & Clients & Friends
It was a wild day on Wall Street. Today’s hysteria seems to be related not only to the Coronavirus, but to the oil markets as well. Due to the collapse of the most recent OPEC deal, the intraday price of WTI Crude Oil fell below $28/barrel. Today was the second worst day for oil prices since WTI began trading on the Nymex; second only to a day during the gulf war in 1991. In addition, Italy quarantined their entire country, and the CDC suggested that people over the age of 60 stay home. It was, needless to say, a historic day.
That said, I want to offer some perspective. As of today, the S&P 500 is down 19% from its recent all-time high. During the 2008 financial crisis, from its top to its bottom, the S&P 500 was down 56%. During the 2002 tech bubble burst, the S&P 500 was down 50%. Leaving the coronavirus aside, we aren’t yet in the territory we would expect during a normal recession. Meaning, we have a lot more to go.
The decline has been rapid but not unexpected, and we have been planning for it for quite some time. While we do not intend to quote stats at this hour, our rough estimate is that most clients’ portfolios are down between 0%-6% depending on risk profiles as of the market close today. So, despite the hysteria in the public, so far, we at MORWM feel comfortable with the insulation we’ve provided to our clients’ portfolios.
History shows us that when the markets are overvalued and investors become complacent, often an external force causes a rapid recalibration within the markets, realigning them with more appropriate valuations. From an investment standpoint, we will continue to compare the value of investment assets to their forecasted fair value as economic data pours in over the next few months. That is how we will determine when a buying opportunity is upon us.
The most important message herein is that we are not surprised that something has caused a 20% fall in the markets. And whether it happens over the few weeks, months, or years, we expect the losses to exceed 40%, probably closer to 50%. The second most important message herein is: we are watching carefully. No one here at MORWM is asleep at the wheel.
As we said in our last update: “Take care of your family, we’ll take care of your portfolio.” And we’ll keep you posted all the way through.
-Matt & The Crew at MORWM
Matthew Ramer, AIF® Principal, Financial Advisor MOR Wealth Management, LLC 1801 Market Street, Suite 2435 Philadelphia, PA 19103 P: 267.930-8301 | c: 215-694-4784 | f: 267.284.4847 | 601 21st Street, Suite 300 Vero Beach, FL 32960 P: 772-453-2810 email@example.com | www.morwm.com The majority of this content was written and distributed MOR Wealth Management, all rights reserved. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a registered investment adviser. Fixed insurance products and services offered through CES Insurance Agency.