Broker Check

Quote for the week

February 28, 2020

Buy Low, Sell High is an adage attributed to Warren Buffet. also known as the "Oracle of Wall Street'.  

With the speed and depth of the recent market decline and the angst or panic that some seem to be experiencing it is time to pay attention to what is in our portfolio.  How much liquidity we need or if there are some opportunities to pursue.  Investing can be an unsettling experience for many and that is why some seek the advice of a professional financial advisor or avoid any investing at all. 

In the short term the markets move all over the place with each significant plunge eliciting calls for an impending recession and/or a deep bear market. However much of the time it’s just chaos providing an opportunity for investors before a resurgence. For example, over the past 50 years in the US there has been 21 episodes of 10% or greater share market falls, but only seven saw recessions and bear markets. 

Investing involves risk. Not investing involves a different risk.  The risk of little or no reward.  Everyone should have a portion of their savings in a liquid secure account. However there is little or no return on most liquid secure accounts.  Having some of your assets invested in anything involves the risk of loss,  However that too can be mitigated by time and allocation. 

The primary reason attributed to the recent market volatility is the outbreak of the "Corona-Virus" and the uncertainty and fear over a global pandemic.  In my opinion there doesn't appear to be any market fundamental weakness at the core of this decline and if a solution is discovered soon this could result in an "V" Curve crash" of the market.  Meaning the recovery should be as quick as the decline.  Typically market declines are more of a "Check"  Curve,  fast on the decline and gradual on the recovery.  There are usually signs of an recession or other market calamity for a prolonged decline and even slower recovery like we experienced beginning in 2008.  Much of this market adjustment can also be attributed to the opportunity to reap some of the rewards of the market appreciation and phenomenal market values of some sectors of the market.  Some have pointed to an perceived overvaluation of companies and higher P/E ratios  with a secondary fear of the Pandemic. 

I believe with the interest rates still being extraordinarily low and the money supply high.  Unemployment overall at a historically low level.  Wages increasing, and a general  positive outlook on the economy and future, despite all the rhetoric of the political season we will see a recovery and resurgence.   There are factors that could unhinge all of that but it isn't part of the current mixture that I see. 

  Much like the abundance of political ads that we are going to be subjected to over the next few months.The opinions expressed are mine and may not reflect the opinion of other advisors or Waddell & Reed.  In other words... My name is Doug Hardin and I approve of this message.  :-)


This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. The information presented does not constitute a solicitation for the purchase or sale of any security and is not a recommendation of any kind. Please consult your financial advisor before making financial decisions.  Diversification and asset allocation are investment strategies that can help manage risk within your portfolio but they do not guarantee profits or protect against loss in declining markets.  03/20