Market Update – March 10, 2020

Unfortunately, in the last week and a half, international markets have reacted negatively to several factors, most notably as a response to increasing concerns regarding the Coronavirus. This issue was compounded yesterday when oil prices dropped precipitously due to Russia and Saudi Arabia engaging in a price war regarding the cost of oil.

In times like this, it is essential to take a cautious approach while at the same time recognizing certain trends that have shown to be true with respect to market fluctuations. The two most recent down markets that are fresh in people’s minds occurred during the calendar year of 2008, as well as the month of December 2018; these losses represented some of the biggest losses seen since the great depression.

While it is important to recognize that these markets occur and to build your investment portfolio accordingly, it is also important to realize that these markets are typically followed by quite positive rebounds, over the same time frame as the losses occurred.

For example, the Toronto Stock Exchange (TSX) tracker, showed the following statistics in those down markets:

  • 2008: 35.02% market reduction
  • December 2018: 5.76% market reduction

Over the same time frame, the S&P 500 tracker, one of the main US market measuring tools, saw the following losses:

  • 2008: 37.00% market reduction
  • December 2018: 9.18% market reduction

However, over the same time frame (a calendar year with respect to the 2008 crash, and one month for the losses in December 2018), we saw the following rebound:

  • TSX:
    • 2009: 30.70% market growth
    • Jan 2019: 7.84% market growth
  • S&P 500:
    • 2009: 26.46% market growth
    • Jan 2019: 7.30% market growth

This tells us that logically, keeping your investments in the markets, while stressful, is the best thing that can be done long term. That being said, it is always prudent to review and potentially update your strategy, based on new information that presents itself. If you would like to do so, please let me know and I will be more than happy to sit down to go through everything and to discuss any potential changes to your investments.

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