Broker Check

Flatten the Curve (excellent video) and what that means for a Recovery

March 24, 2020

A friend shared with me this super-educational Coronavirus video (thanks Jonas). I learned more in eight minutes that I previously knew in eight weeks! PLEASE click here to watch: What This Chart Actually Means for COVID-19

Now obviously I have an investment management reason for sharing it. Even as this present health pandemic rises and fears escalate, here’s some news…it’s going to end! If we do our part with proper washing and social distancing, it will end with much less stress on our health care system and with many more lives saved.

So as we hope and pray and do what we can to “flatten the curve” (as the video does an exceptional job of illustrating) the stock market free fall will also end at some point. Yet typically, stock declines do not flatten out at the end but rather and most often, hit bottom and then rebound sharply and quickly. This is part of what is known as the “V-shaped recovery.”

Here’s the catch; even as the V that we have been experiencing on the way down has been very jagged and volatile (within the descent we’ve had several of the best single days ever) it can also be equally volatile on the way back up.

When we hit the bottom of a Bear Market and start back up the other side, there can still be great fear to those who jumped out at some point on the way down and who said within themselves, “I’ll get back in when things calm down.”

There will be no press conference announcing the day that market bottoms. It will not be until much, much later, likely months, that we even know that we’ve risen 20% from the lowest point and thus, shifted back into a Bull Market. Even then, fears will still loudly persist; worries that we will drop again, i.e., that what we experienced on the way back up was a “fake recovery.”

It is for these reasons that we urge our clients to trust their portfolios! They have been thoughtfully constructed and are vastly diversified, allocated specifically with your goals and times frames in mind.

We certainly and often do reexamine allocations with you and make changes if and when needed, yet never because of an emotional reaction but rather, as a thoughtful action, based on your individualized planning.

Let's do our part socially by distancing, but with regards to your portfolio, hold it close.   

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.