Staying the course amid market volatility

State of the Stock market

Financial markets have been roiled recently amid fears over the impact of the fast-spreading coronavirus.

These near-term disruptions to economic activity are the result of efforts to contain it. We see a downshift in 2020 global growth, with uncertainty around the size and pace of slowdown. While there are always unplanned risks, we do expect a rebound in activity once the disruptions dissipate and don’t see it derailing the U.S. expansion at this time.

What are key takeaways for investors?

First, we encourage investors to keep things in historical perspective. Second, know the importance of staying invested, and avoid reacting in ways that could derail long-term financial goals. Finally, consider investment strategies to help you build a more resilient portfolio.

To provide historical context, the table below illustrates how the stock market responded during other past growth scares and bear markets. It also shows the period of positive market performance in the 12 months that followed these crises.

Stay invested

The chart below shows how a hypothetical $100,000 investment in stocks would have been affected by missing the market’s top-performing days over the 20-year period from January 1, 2000 to December 31, 2019. An individual who remained invested for the entire period would have accumulated $324,019, while an investor who missed ten of the top-performing days during that period would have accumulated $161,706.

Sources: BlackRock; Bloomberg, Morningstar as of 2/28/20. U.S. stocks are represented by the S&P 500 Index, an unmanaged index that is generally considered representative of the U.S. stock market. Index performance is for illustrative purposes only. It is not possible to invest directly in an index. 1Only period without a corresponding best day within one month was September 17, 2001. Past performance does not guarantee or indicate future results.

Please reach out to us with any questions you have.

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