Monthly Market UpdateSubmitted by Texas Legacy Wealth Management on March 2nd, 2020
2020 got off to a strong start with the S&P 500 rallying almost 5% through the first 7 weeks of the year (YCharts); however, the market’s positive momentum came to an abrupt end during the last week of February. US stocks pulled back about 13% amidst fears of a rapidly spreading coronavirus and the potential impact on the global economy. We closed the month down roughly 8.5% for the year after several months of relative calm (YCharts).
While the spread of the coronavirus wasn’t the only news in February, it has been the most talked about market risk over the last few weeks. As such, we have outlined some key points when it comes to investing and the potential impact on your portfolios.
- Don’t panic - Knee-jerk reactions based on fear may allow investors to feel better emotionally in the short run, but often put long term goals at risk. We are monitoring developments closely and changes to portfolios should be carefully thought out and not based on a drop in stock prices.
- Asset allocation – We frequently review your asset allocation in an effort to make sure you don’t have too much (or too little) risk. While there is no silver bullet in avoiding volatility, fixed income can potentially dampen volatility. Achieving long term goals requires patience and consistency. We encourage you to maintain your long-term allocation, particularly during periods of volatility unless you feel your goals, time horizon, or risk tolerance has changed. If you want to discuss this further, please call us!
- Uncertainty & Economic Impact - Containment measures around the world (primarily in China thus far) including quarantines, and travel limits are likely to impact economic activity globally. During past outbreaks we’ve seen economic activity recover as most demand has usually been delayed but not destroyed. Investors will be watching closely for signs of economic recovery in the weeks and months to come, but the uncertainty surrounding the potential severity and length of impact may lead to continued volatility.
We will continue to monitor the evolving situation and be ready to make changes to portfolios if, and when, warranted. We look to our economic dashboard for guidance in positioning our portfolios over the long term. We continue to believe that our dashboard suggests a slightly more cautious outlook at this time (as it has for a number of months) given a potentially increased chance of recession over the next 9-12 months and our portfolios are positioned accordingly.
We will continue to communicate our outlook and any changes to it as market conditions change. If you have any questions for us or simply want to review your asset allocation please don’t hesitate to let us know.
Your Team at TLWM
* Investment advice offered through TLWM, LLC., a registered investment advisor.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.
* This document is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Texas Legacy Wealth Management and its representatives are properly licensed or exempt from licensure.
* Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
* No strategy ensures a profit or protects against a loss.