How to Think About the Current Market Correction

Mar 9, 2020 | Commentaries

On February 28, we shared our thoughts on recent market volatility and the abrupt downturn in financial markets. While the numbers you’re seeing today appear shocking, our views on markets remain unchanged. Specifically, we are not surprised by this re-pricing of what we have continually believed to be an overvalued stock market.

When markets correct, it is important to consider adjusting asset allocation targets to add risk as valuations decline. We are monitoring price levels as we wait for what we believe to be a good entry point. Bear in mind that markets have undergone this kind of downward volatility before, most recently in 2008/09.  Ultimately, the movement resulted in one of the greatest buying opportunities in a generation.

Further, please also note that while the asset classes that market pundits talk about the most (e.g., domestic equities, oil) have been hit the hardest, the asset classes that generally make up the largest proportion of our clients’ portfolios (investment grade bonds) have performed well, as we would expect in a flight to quality.

We will continue to closely monitor the situation and, as always, please let us know if you would like to discuss the current market action (or any other matter) further.