A lot of us working with clients have been asked in the past week: When will the stock market quit going down?
It's often said that market bottoms are “a process.” Or, nobody rings a bell at a market bottom. But there is an array of signals that might help approximate when the low might be in.
One such statistic would be a number that shows Coronavirus infections are in retreat in the United States. (This has little to do with corporate earnings, economic growth or price-to-earnings ratios.) This statistic should also imply a slowing down of the death rates of the virus.
Many Wall Street firms suggest a “peak” in daily infection rates as one of the things needed for a market bottom. In the current crisis, which began in late December in Wuhan, China, Chinese stocks in the Shanghai Composite hit a crisis closing low on February 3rd after the rate of infection slowed.
While we, along with other advisors, would like to crunch numbers related to economic growth and corporate earnings and predict how bad bear markets will get, right now, that is simply hard to do. Too many unknown variables exist.
What we do know is that over the life span of Windsor’s 34 years in business: uncertainty is certain. Other periods of uncertainty: The crash of 1987, the 2000-2002 recession, the Great Recession of 2008 are examples of taking the time horizon of our investment strategies seriously: rebalance, buy low and sell high where possible. Wait for the rebound. Historically, rebounds always come in due time in our great country.
Even though in bull markets, some dislike owning bonds, bonds have provided stability for our portfolios. They provide the dry powder for rebalancing or meeting your withdraw needs in the interim.
Warren Buffett says: Markets can be irrational longer than we - as investors - can be patient. Our patience as investors could be continuing to be tested. We understand that. We have been through tough times before. A rebound is around the corner.