“The Price is Right?” & “Framework for a Path Forward” – Nvest Nsights Q1 Newsletter

Nvest (Bill, Steve and Jordan) wishes for you and your family/friends good health, safety and wellness from this COVID-19 virus and the economic challenges.  We are greatly concerned by the very real human health impact and ongoing crisis; praying for a timely cure for these current health and economic challenges.  Let us know of your worries and if we can be helpful.  While it would be unwise to meet in person due to social-distancing protocol, we can visit virtually via web meeting to review your needs, portfolio reactions, and discuss LIVING LIFE financial planning questions.  Call or email to coordinate a time to visit.

This quarter you will find several timely updates.  First, “The Price is Right?” reviews how swift was the transition from bull market into bear and shares historical perspective; places the size of recent government responses in context; and what we are watching to signal that durable recovery may be near or developing.  “Framework for a Path Forward” examines whether the market low observed on March 23 was “a” low, or “THE” low.  It is important awareness that retests are normal during periods of market stress, but the market will offer clues beneath the surface about where we are and when/what actions are appropriate to position portfolios for recovery.  “Thoughtful Comments for Careful Consideration” is a compilation of notable quotes from highly respected individuals that can be helpful during challenging environments.

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When Life Throws You Lemons, Make Lemonade – Strategies During a Bear Market

No sugar-coating it; the start of this New Year is not what any of us hoped for.  Day to day life is highly uncertain, and investments are bruised.  While the cause of the current environment is unique and uncharted for every living generation, this too shall pass.  Periods like this can cause one to feel paralyzed, with nothing to do but wait it out.  However, there are strategies individuals can pursue that will position them to benefit when the storm begins to clear, and simultaneously help you restore a long-term mindset.

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Special Market Update: Pain & Gain

With stock prices, even bond prices, falling faster than they rise the next day, fear is dominating many investors’ thinking about investing and many current life activities.  Schools, restaurants, churches are closed, temporarily.  Gatherings of even a few people are discouraged.  Numerous US states are implementing business lockdowns and stay-at-home strategies to contain the spread of COVID-19.  At current, there are no tools (vaccine, drug) to address this novel virus, other than shutting economic activity down to buy time for the doctors and drug scientists.  Unclear is when we are going to open the economy back up (April? May?), or if we can make it through the year without shutting down again in the Fall.  Closing the economy is adding to everyone’s fear of the unknown – a multi-dimensional fear not limited to just Coronavirus, and including the prospects of severe economic/financial damage.  Put simply, most all news seems bad.

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RESOURCE PAGE: Coronavirus and Market Volatility Updates from Funds

In pursuit of providing clients access to timely and relevant commentary to the current coronavirus market impact, below are links to research and analysis updates we are receiving.  The aim is to share articles that add or enhance the understanding of the root worry (coronavirus and it’s impact on the global economy) and/or provide historical perspective on prior market corrections.

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Market Alert – Follow The Recipe

I am hopeful this will be a final Market Alert relative to the past few weeks of hysteria, fear, and market turmoil. The market spoke loudly yesterday (Thursday, March 12th) as it blasted on all areas of the financial markets – gold, bonds of greater risk orientation, and stocks around the world.  We are hopeful recent action was the capitulation event for the market forming a bottom – it never feels like the bottom near the bottom.  Time will tell.  We do not know, we cannot model how Coronavirus will evolve and/or how it is minimized.  We expect Washington will deal with the public erosion of confidence being expressed in the economic and financial markets both here and globally.

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MARKET ALERT for March 12, 2020 – “Market Stress”

To start, one should read this following thought several times: “It never feels like a low near the low”.

Market Stress is absolutely no fun.  After all these years (over 40), market drawdowns are terrible and bewildering; confounding one’s ability to comfort others when no one knows the future.  We can review history (a lot of examples) to offer perspective, but providing certain future direction is not possible.  We are all in it together.

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MARKET ALERT for March 9, 2020 – “Year of the Rat”

Ironic – today, Monday March 9th is the 11th Anniversary of the March 2009 stock market lows, meaning this date was the start of the current bull market advance (we’re wishing it runs longer).

Generally, we are not fond of writing Market Alerts, as it often signifies market action that is unsettling to investors and clients.  Further, no one knows exactly how to model a global pandemic.  And, we usually don’t give a passing thought to the entity that China uses to describe its New Year, this year being called the “Year of the Rat.”  Not to travel that path; yet most are well aware that rats carry all sorts of disease and illness if active pursuits of cleanliness and pest control are not followed.  The global health environment appears to be actively searching for effective measures to curb the spread of Coronavirus.  Additionally, Washington DC appears to be treating current events as mainly a health-policy issue.

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“Hysteria Unmerited” – March Commentary

Does any investor believe the last week of fast-moving negative market action was reasonable?  Continuing our theme relating to seeing clearly with 2020 vision…. from our perspective, and many other research pieces we are receiving, indicates this past 7 days was “hysteria unmerited.”  It is mind boggling how many traders (not investors) display a “shoot first and ask questions later” mentality.  When one is unable to understand or is unable to quantify a concern, natural intuition reaction is “jump, and look later.”

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MARKET ALERT – Seeing Clearly in 2020 Vision: Keep Seat Belts Fastened

If we owned a crystal ball, we might know when to sell before big market moves down. If we owned a crystal ball, we might also know when to buy at the market low, before big moves up. Would you like to use a crystal ball for your investment timing tool? We know that if you rely on the crystal ball for investing, sooner or later you will be dining on crushed glass. No one owns a crystal ball that works. Don’t attempt to use one.

Given the volatility in the global and domestic markets this past week, it may be helpful to summarize a few thoughts for consideration:

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Market Catches the Coronavirus: Thoughts Around Current Volatility – 2/29/20

In recent days, the US financial market’s relative calm has fallen victim to rising fears relating to the coronavirus – more technically referred to as covid-19.  In just two days, the S&P500 and Dow have “skinnied” by more than -6% and the loss over the last week roughly -7.5%.  Many international markets are down even more sharply, especially amid already weak or recession-like economic data.  This is a stark contrast from the very attractive gains the market was enjoying in February as the narrative around the new virus seemed to be calming/contained from when it first began hitting newswires a month ago.

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