Market Update February 2020

After a year like 2019, the stock market rolled into 2020 with a lot of confidence and promise. The Dow Jones Industrial Average kept right on climbing from its close on December 31st of 28538, all the way up to the new record high of 29348 at the close of market on January 17th. Then it fell back a bit. Then it fell back a bunch. On Monday, January 27th the Dow lost 454 points. On Tuesday, Wednesday and Thursday it climbed 323 points to make up most of what it had lost on Monday. Then Friday the 31st came, and the media started really reporting on the Coronavirus from China. That spooked the markets and the Dow fell 603 points to end the month 282 points lower than it started the month with. It’s true, the death toll from the virus is rising in China. And that country has quarantined whole cities. But there have only been eight confirmed cases of the Coronavirus in the USA. That number is expected to rise, but not by a whole lot. Shoot, America averages 51 deaths each year by people getting struck by lightening. So the stock market getting freaked out by a few people getting the flu doesn’t make a lot of sense. But neither is it surprising. When the stock market rises for a long time without any pullback, investors start looking for anything that could trigger a downturn. And they usually cause it themselves by jumping the gun on the least little bit of bad news. We’ll have to see what February has in store for us, but the economic numbers still look strong. Earning are up, unemployment is still down, and workers are still socking money away in their 401-k’s. So I’m not too worried about a flu virus that is mostly on the other side of the world. What does worry me, though, are the people who think something like this will wipe out their investments. I’ve been in this business for 36 years and I’ve seen a lot of bad news come across my computer screen. Through it all, and in every case, the stock market sometimes gets knocked down, then it picks itself back up, dusts itself off, and reaches new highs. When I got my start in this business in 1984, the Dow was just over 1200. Now it’s over 28,000? If you ad in the dividends over that time, the market has made close to 11% per year on average since I got my start in financial planning. And the other people on the radio want you to be satisfied with a puny 3 or 4% a year? Right. They’ll work hard to scare you into thinking the stock market is a dangerous place. But just like the haunted houses that pop up every October around here, they might be scary, but they’re not too dangerous… if you educate yourself or if you find a good, credentialed financial advisor who can guide you through the maze and help keep you safe. Is a market downturn coming? Is another stock market crash in our future? Of course it is! Market rules haven’t been suspended just because it’s been over 11 years since we saw the last major market crash. And since one can predict that a market crash is coming (even though nobody knows when), the radio annuity guys will work hard to convince you that their annuity will save you from financial ruin by giving you a product that will only produce a small return, and one you’ll have to stay in for 7 to 10 years. That is, unless you want to pay a huge penalty for withdrawing your money before that time. No, we believe that through active management, which is what we do here at ProVest, we can help our clients avoid the most devastating part of a market crash, while still maintaining the ability to benefit from the long-term gains the market has proven over and over again it’ll give its investors who have the confidence and temerity to stick with it. As the performing artist Zach Williams says in one of his songs, “Fear, he is a liar. He’ll stop you in your steps, steal your happiness.” So don’t let your own fear rule how you invest. Become knowledgeable, or hire someone that has the knowledge and wisdom to help you make the return you deserve.