The Discerning Investor by Julie Jason

Investing in the Coronavirus Stock Market: A Bumpy Ride

Just a few months ago, we enjoyed a stock market that reached all-time highs on Feb. 19, 2020, when the S&P 500 index closed at 3,386.15.

Just six trading days later, we were in a correction (a decline of 10% or more).

What changed? Who can forget? An unexpected virus that was spreading fast and injecting great uncertainty into the financial markets. The markets do not like uncertainty.

While we did not know it at the time, a bear market (20% decline) was developing. By March 23, 2020, the S&P 500 index had fallen 34% to 2,237.40. Looking back from today, March 23 marked the current bottom. That’s the day the Federal Reserve announced asset purchases to ensure that financial markets would function properly.

Now (April 30), just 50 trading days after the peak, the S&P 500 is at 2,912.43, up 30% from March 23.

In the interim, we’ve seen some of the most volatile trading days in history.

Here are the worst and the best days so far this year.

Worst: 1) March 16 (down 12%), ranked the third worst in a list of 30. 2) March 12 (down 9.5%), ranked as the sixth worst decline. 3) March 9 (down 7.6%), the 19th worst.

Best: 1) March 24 (up 9.4%), ranked ninth best. 2) March 13 (up 9.3%), ranked 10th best. Then, another day in the top 30, April 6 (up 7%), which ranked 30th best.

To give you some perspective, since the 1920s, the worst one-day decline was Black Monday, Oct. 19, 1987 (down 20.5%). The second worst was Oct. 28, 1929 (down 12.3%), and the third was March 16, 2020 (down 12%).

The month of March 2020 made records: down 12.5% for the month, the 19th worst in history, according to Sam Stovall, chief investment strategist for CFRA. CFRA is one of the world’s largest independent research firms. Looking at the top 30 daily movers (up or down), March landed on the “worst” list three times and the “best” list twice.

April also made the record books. The month of April 2020 was the 12th best month, the strongest of any April since 1938.

Stovall explained: A positive performance in April is not surprising, however, since it is the best month of the year in terms of average price change since World War II and the second best in frequency of advance.

What’s next? “A continuation of the market’s climb is less certain, however, since May’s typical performance has been below average on a percentage change and frequency of advance,” said Stovall.

A bumpy ride may still be ahead. While it might be tempting to look to safety above all else in uncertain times, thinking long-term can benefit most investors. We don’t know yet if March 23 will be THE bottom for this coronavirus market. But we do know that long-term investors look to add to their portfolios when prices are lower.

Now is the time to prepare a buy list, if you haven’t done so already. Let me give you one resource now: The Outlook, published by CFRA Research. The Outlook is the oldest continuously published investment newsletter in the U.S. You can try it out for free here: https://advisor.marketscope.com/#/Outlook90.

We’ll talk more about other stock research tools, but I’d like to hear from you. What are your favorite sources for stock research? What questions do you have about investing during the Coronavirus market? Go to tinyurl.com/yaa399g7 to take a survey to let me know or write to me at readers@juliejason.com.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION