Dear NorthAvenue clients, We wanted to reach out regarding the recent volatility in the stock market. Last week all three major U.S. stock benchmarks recorded their worst week since October 2008—down more than 10%. We have, however, seen some signs of recovery this week. Our advice is, and has been, to tune out the noise and not pay much attention to the short-term movements in the stock market. This advice still rings true, but it's harder to tune out when market commentary dominates what you hear on the news. We understand that the news surrounding the Coronavirus (COVID-19) is frightening and do not want to diminish your concerns. Global health experts still do not know how many cases will develop. The Centers for Disease Control has an updated list on prevention techniques. You will find that these techniques are not much different than how you prevent getting a cold or flu. To date, your risk of contracting COVID-19 remains low. NPR wrote a helpful article about how you can prepare at home in case a local outbreak occurs. One tip we would add: have some cash at home in case you aren't able to use credit cards or access ATMs. If the situation intensifies and we are compelled to avoid public places, please be assured that all members of our staff have the capability to work from home. We can access client records remotely by logging into a secure server that uses two-factor authentication. We expect no disruption in the service that we provide to you. The rise and spread of COVID-19 is bringing uncertainty into the markets. Companies may experience supply chain disruptions, factories may not be at full capacity given quarantines, demand for oil and other raw materials falls, etc. All of this impacts the stock market decline. We encourage you to remember that the equity portion of your portfolio is invested for long-term growth and we look to cash and bonds for short-term needs. To put things in perspective, please see the chart below. It shows that the current value of the Dow Jones Industrial Average, which is highly publicized on the news as the “market.” Its value this week is similar to its value last August.
It’s good to remind ourselves of this when the news makes it sound as if volatility is outrageous, or like we’ve never seen before. Really, we’ve just lost on paper what we have earned since August. There was also a similar dip to what we are seeing today in late 2018. It could still get much worse, but what we’ve seen recently is fairly typical over the long term. If you have specific questions or concerns, please call the office, and Anne will help put us in touch. Let's all take a deep breath, prepare and not panic, remember to control what you can control and send good thoughts to our global healthcare officials and practitioners on the front lines. Best regards, Your NorthAvenue Team