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Posted on March 9, 2020

Perspective on Market Activity

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By Robert W. Huntley, CFP®, CHFC®, CKA®, Founder & Wealth Advisor

 

With emotions running hot and heavy in the markets today, here is my “real time” perspective on today’s market activity.

 

Some perspective:

Today is March 9, 2020. It was exactly 11 years ago today that we began this current historic 11 year rally in the US stock market.

Early into trading today, a 15 minute trading halt kicked in when the S&P quickly sold off by 7%. The last time that happened was on 12/01/2008.

These trading curbs were created back in 1987 after the US stock market sold off 22% in a single day. I think it’s good because it gives traders a minute to collect themselves and think about what’s happening. So far it seems to have helped as things stabilized after trading resumed.

As the day goes on we might see additional trading halts. Halts can also happen at 13% and 20% single day sell offs. Time will tell.

My view is our markets are performing as expected based on the fact that we’ve seen this sort of thing before and put systems in place to better manage short term volatility like this.

 

See the opportunity, not the fear.

A core value at Wise Counsel Wealth is optimism. This is not some Pollyannaish thing for us. It’s rooted in historic observation and reality.

All my life I’ve observed the masses react one way while wiser, calmer souls quietly step in to take advantage of opportunities created by fear.

If you keep your head when all those around you are losing theirs, you will come out on top.

Here are a few quick examples of this sort of thinking:

  • PUT CASH TO WORK: If you’ve been sitting on a pile of cash for years, this could be a good time to consider moving some capital into the market. Some good companies are already selling at discounted prices. History tells us that once fear runs its course, good things tend to happen for the patient investor. If you’re still concerned about further drops then use a strategy with some hedging built into it that limits your downside.
  • REFINANCE LONG TERM DEBT: Refinance any long term debt like your mortgage or long term business loans. Rates are at historic lows. Take advantage of that if your circumstances match the opportunity.
  • ROTH CONVERSIONS: Convert IRA funds to ROTH IRA’s while the tax hit is lower due to lower IRA balances. You pay tax on the amount of conversion at the time the IRA is converted.

 

This is no time to be fearful. This is a time to look for opportunities to advance your wealth and plan.

Chances are you have friends or family who are worried. Tell them to call us. We are happy to help them if they need some guidance and objective advice.

 

Call us if you need us.

 

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