A Letter to Our Clients
May 6th, 2022
A Letter to Our Clients
I wanted to reach out to you, to address the market turmoil and if or what should be done, why the market is moving as it is, and how long this may last.
Honestly, I simply do not know how long this market downturn will last, but I expect that we may start seeing a turnaround by the later part of the year. It is moving downward because it is what markets do over time, the market is cyclical, but also this is a “post Covid” issue, supply chain issues, inflation are the two main culprits.
BEAR MARKET FACTS
Bear markets are usually identified by a 20% or more drop over a 2 month period. The longest bear market lasted 630 days, the market was down 48.20%. The average bear market last 289 days with a 35% drop. There have been 26 Bear markets since 1928.
BULL MARKET FACTS
There have been 27 bull markets since 1928. Bull markets average 991 days. We have been in the longest bull market in history-this began in 2009 to arguably now.
So, technically we are still in a “correction”, as the S&P is only down 13%, The Dow is down 9% and Nasdaq is off 19.69% YTD, nearing “Bear” territory.
Energy is still the leading industry this year, up 56.69%, most of the other major industries are suffering.
So what do we do. We ride this out, as we have done every other correction and bear market. We take advantage of the lower prices when it makes sense. We stay aware, and remain patient. Those of you who have been invested in the market for at least 5 years have admittedly given up some gains, but you are still “waaaaayyy” ahead.
I know that it is hard to see the drop in your portfolio no matter, but remember how much you have made, and that this drop is only temporary, so think of how much more you will make on the next run upward.
For those who are new, please be patient, my suggestion is not to look at your portfolio because you will get stressed. Know that this is temporary, and the best time to invest in the market, which means if you have more to put in, we should talk.
A lot of you wonder why I hold cash sometimes instead of investing it all, this is why? It is a strategy, so that we do have money available, to take advantage of the lower prices when the market drops. These are the times when money is made.
Some of you wonder if we should get out of the market and then get back in-unfortunately, we will loose more money trying to execute this strategy.
There is more money to be gained (more bull markets and longer bull markets) than to be lost. So, again, I follow the Warren Buffett strategy, and that is to buy and hold. It truly works best!
We have gotten through many corrections and bear markets before, so we will indeed get through this one. This one seems more manageable, businesses appear to be profitable and there seems to be cash/liquidity.
This appears the same with individuals-more savings, less debt. I feel hopeful that this “bearish” market will pass soon.
Lastly, I want to stress that I am here for all of you-please call me directly for a quick conversation if needed. If you need more time, please reach out to Nina to set up an appointment. I know that my calendar is full and sometimes getting an appointment seems too far out, so if you absolutely need to see me sooner, let Nina know and we will work something out.
In the meantime, hang in there, don’t look unless you have to. Reach out when needed.
Your Investment Advisor
Vanessa A Donaville