Investing is a Marathon
Like a marathon runner slowing down in order to accelerate later, last week’s market volatility was analogous to the stock market catching its breath after outpacing itself over the past couple of weeks, which makes futures moves to the upside more sustainable and long-lasting. The good news is that the pullback investors experienced in the stock market over the past couple of days is common and will ultimately set us up for sustainable long term returns.
The bottom line is that as we progress through the month of September, the economic recovery is following the 2009 playbook and is backed by low interest rates, record monetary and fiscal stimulus, along with a record amount of investor cash that remains on the sidelines that will eventually be enticed back into the market, which would provide a positive boost to asset prices.
In this week’s market update, we are going to review last week’s market volatility, the factors that drove the selloff, what it means or doesn’t mean for your money, and how it’s impacting the positioning of client portfolios. We are also going to look back at the 2009 stock market recovery and compare that to the current COVID recovery, study the similarities and differences and then compare the amount of monetary and fiscal stimulus between the two historical periods and what this ultimately means for asset prices going forward. Lastly, we will wrap things up by conducting a health check on the credit markets.
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