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Seeing Through the Storm
From the Baltimore Clubhouse – As Oxford Club Members know all too well, markets fell dramatically this week in reaction to the spread of COVID-19, the disease caused by the novel coronavirus.
In fact, with major indexes down about 12% in just eight days, it was the fastest correction in history.
It may be tempting to run to cash and let chronic worry get the best of us at such a moment.
In fact, we’ve been here before…
As recently as 2018, major U.S. stock indexes suffered two corrections in the same year, putting investors on edge and the Fed on the defensive.
Yet stocks went on a bull run from their immediate lows to new all-time highs. And we watched the Dow gain 36%… the S&P 500 rise 45%… and the Nasdaq Composite surge 59%.
In recent years, we’ve absorbed market shocks similar to the current one – the SARS virus of 2003, the financial crisis of 2008, a U.S. government debt downgrade in 2011 and an oil price collapse in 2015, among others – that sent financial markets down dramatically. They were all followed by equally dramatic rises in stock prices over the following 12 to 18 months.
These advances speak to the resilience of the market after a momentary panic and to the underlying fundamental strength of the U.S. economy, which drives corporate profits and ultimately bull markets.
So market corrections like this week’s are hardly unprecedented. And they should not shake us from our fundamental philosophy of investing, which is codified in our Four Pillars of Wealth.
Let’s stick to our diversification as illustrated in the Oxford Wealth Pyramid and adhere to our exit strategy by honoring our trailing stops. And as always, let’s look for new opportunities amid the dip in stock prices.
These strategies ensure that you will not only gain the most when markets are up, but be best-protected when markets are weak or on edge.
Even in this worrisome environment, Club strategists are working to identify the stocks, bonds, options and other investments that will bring you short-term gains that thrive on volatility and long-term gains to outperform the market.
In today’s video, which is in the style of a Behind the Trade segment, Chief Trends Strategist Matthew Carr describes how his Dynamic Fortunes trading system is able to uncover companies with cyclical businesses that tend to be very predictable in terms of revenue and profits, regardless of what is happening in the economy or the rest of the market.
While black swan events, election cycles, news headlines and other triggers of market mayhem may rattle some, we remain confident that temporary setbacks will soon turn into greater market opportunities.
And rest assured that we at The Oxford Club – our strategists, analysts, research team and the rest of our staff – will be here to keep you informed and see you through any and all storms that come our way. After all, we’ve succeeded together despite many tough times in the past.
Here’s to a brighter tomorrow.
Enjoy your Sunday,
Julia