One of the Worst Days in Market History…
February 24, 2020
One of worst stock market days ever.
As I established with my December 4, 2018 “Market Update”, I will send you my “Market Update” when two or more major U.S. stock indices drop >3% on the same day. Today, they all did. Today’s fall was one of the worst down days ever for the Dow Jones Industrial Average (Dow); it was just the third time it fell 1,000 point in a day.
Today was the worst day for the stock market in over 2-years. Every Dow stock was down. All major indexes down more than 3%. Today’s decline erased all of the year’s gains. Here’s the Dow’s chart year-to-date after today’s loss.
BUT, today’s stock slide was no where near as bad as the news headlines you will see say. Today’s fall occurred just after the major U.S. stock indexes rose to all-time-record-highs last week. They have climbed on average about 35% in the last 14 months. A pull-back was to be expected. For perspective, the Dow has dropped 2% or more 260 times since 1990. It has fallen 3% or more 81 times since then. Not a reason for panic.
A widening coronavirus outbreak knocked down the global markets today. The spread of new “Covid-19” virus cases outside of China, such as South Korea, Italy and Iran, sparked the stock sell-off. Coronavirus cases have risen to about 80,000, with over 2,600 deaths.
Market volatility like we are seeing now unveils the value of prudent portfolio management. Fear is growing in the stock market. Today the market volatility index, or VIX, shot up to the highest level since January 2019. I have this defensive position in client accounts. It soared nearly 19% today. Further, not all stocks fell today. Gilead, a core hold in BAM’s Diversified Value portfolio, gained nearly 5% today. Gilead benefited from an acknowledgement from the World Health Organization that its Remdesivir drug is the only drug that appears to be effective in treating the coronavirus.
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John