You’ve seen the news and we have, too. In fact, we have a careful eye on everything going down – and up. We’ve been hearing from many of you about your concerns.
The market is clearly responding to new information as it becomes known, but the market is pricing in unknowns, too. As risk increases during a time of heightened uncertainty, so do the returns investors demand for bearing that risk, which pushes prices lower. Investing is based on the principle that prices are set to deliver positive future expected returns for holding investment assets.
We can’t tell you when things will turn or by how much, but our expectation is that bearing today’s risk will be compensated with positive expected returns. That’s been a lesson of past health crises, such as the Ebola and swine-flu outbreaks earlier this century, and of market disruptions, such as the global financial crisis of 2008-2009. Additionally, history has shown no reliable way to identify a market peak or bottom. These beliefs argue against making market moves based on fear or speculation, even as difficult and traumatic events transpire.
Let’s stay focused. What does focus look like? It’s about the long-range perspective. Volatility is a historical element of the market. But when we zoom out, we see a reminder of why we stay the course.
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