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What the Current Market Correction Means for You
Dear Great Lakes Wealth Clients & Friends,
Market volatility remains exceptionally elevated as fears around the spreading of the coronavirus and global oil price shocks have become even more of a reality. Since February 19, we have seen the SPX post a dismal return of -12.22% (through 3/6). And as of 10 a.m. EST today, the SPX is -5.80% additionally, too.
Today we want to provide an update on where we now stand after another week of market madness. Here’s a quick refresher: a correction is defined as a decline of 10% or greater from a recent high in the financial markets. Corrections can last anywhere from days to months, but a few have lasted even longer. Recently, we’ve seen a bumpy ride, and it’s important to review the context on what this might mean for you and your portfolio at Great Lakes Wealth.
Stock prices have bounced in-and-out of correction territory, as investors attempt to measure the economic impact of the COVID-19 virus and oil shocks to the system. During periods of volatility, it’s important to remember that stock market corrections are not unusual and represent a normal part of the investing cycle, and they can actually create buying opportunities for mis-priced assets. Therefore, we believe that, “Market corrections are a beautiful thing!”
A Reality Check. While significant market downturns can certainly be unsettling, it helps to view corrections from a wider perspective. This is the 7th correction the stock market has seen within the last ten years. You may remember late 2018, when the market benchmarks fell nearly 20% when the Federal Reserve continued to raise shorter-term interest rates as the U.S. economy strengthened. Corrections remind us of a reality we don’t like to think about: stock prices can’t always go up. When prices drop, it can be tempting to give in to our emotions and react, but patience and caution may be warranted. In fact, acting in the opposite manner of our emotions is more typically the correct response.
The Bottom Line – From Great Lakes Wealth: (3.9.2020)
As it stands today, US equities still rank #1 in the long-term technical research indicators that we follow, suggesting a tactical overweight to this asset class across your portfolios. One shift we did see this week in the asset class ranking, however, was the international equities asset class falling to the third-ranked position while fixed income moved up to the second place for the first time since August 2016.
- 2020 – SHORT-TERM: We have seen our near-term indicators move into heavily oversold territory over the past few weeks.
- 2020 – LONG-TERM: With the current violent drop in the markets, we think many opportunities now exist on a Price/Risk/Reward basis. We do think the markets will rebound significantly. We also think there will be continued volatility. Now may be a great time to add or rebalance your accounts? We currently have a “Buy” on 11 of our investment strategies and a “Hold” on our International Opportunities Portfolio.
- Our approach in 2020 – Know what you own… and why you own it! A safe alternative is to make, “+5-8%, while you wait,” inside of our Core-Diversified Portfolio.
- BEST IDEAS - Compelling opportunities exist in Technology, Financials, Real Estate, Metals & Mining (Hard Assets), Industrials, Healthcare, and select Oil/Energy investments.
- We will continue to stay active, diligent, and disciplined while managing all of our investment strategies.
- Please read our March Market Outlook Newsletter for additional information.
We believe that market corrections happen for a host of reasons. We also believe that this current volatility will allow us to find mis-priced assets. Buying mis-priced assets is what creates the best opportunity for our clients to make money. Thus, market corrections are a beautiful thing!
Strategically Strong. Your investment strategy has been created to reflect your time horizon, risk tolerance, and goals. As an investor, getting through a correction means having the poise to ride out, and even take advantage of, short-term volatility. We’ll be paying close attention to market developments in the coming days and weeks, and we look forward to discussing your specific situation with you on our next scheduled call.
If you’re not yet a client, but are interested in becoming one to take advantage of this current opportunity, please give us a call at 248.378.1200 or send me an email at deweysteffen@greatlakeswealth.us.
Sincerely,
Dewey D. Steffen
CEO/Chief Investment Officer
Great Lakes Wealth, LLC is a Registered Investment Advisor. The information provided is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Great Lakes Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered without a service agreement in place.Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at 18 Corporate Woods Blvd., Albany, NY 12211. Purshe Kaplan Sterling Investments and Great Lakes Wealth are not affiliated companies.