When the market volatility started mid-February, it was driven by 3 uncorrelated events.  Initially, the US and China were coming out of their trade war, then the pandemic hit as well as an oil price war.  Markets were driven by fear at the start of this and there was lots of volatility.  Many investors sold all their stocks and got out of the market.  Initially, there weren’t a lot of buyers so prices dropped a lot.  Fortunately, governments took decisive action to help support businesses and individuals who had financial difficulties with the shut down as well as central banks taking steps to continue liquidity in the market.  At the lowest point, the markets were down almost 35%.  Since then some calm and rationality has returned to the markets and we have come up 20% at the low.  This doesn’t mean that the volatility is over, but it’s a nice reprieve.  Over the long term, the track record is that good companies (investments) will continue to grow their earnings and their values will increase.

Here are the approximate market returns to April 27:

High for 2020Low for 2020Current for 2020
S&P/TSX (Canadian stocks)5% (Feb 20)-34% (March 23)-14%
S&P500 (US Stocks)5% (Feb 19)-31% (March 23)-11%

Source: www.bloomberg.com

What can you do:

  1. Continue to diversify your investments
  2. Dollar-cost average if you have extra money
  3. Rebalance
  4. Focus on your goals
  5. Continue to not panic

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