Today – March 9 – is the eleventh anniversary of the crescendo of global panic that marked the bottom of the bear market of 2007-09. By eleven years ago, the S&P 500 had fallen 56.8% from its all-time high by that day. Since that day, the S&P500, with dividends reinvested, has risen four to fivefold.

It is a bit ironic that the world has elected to celebrate this iconic anniversary with – you guessed it – another epic global panic attack.

As of this writing, the S&P 500 is down over 18% from its all-time high. Declines of that magnitude are relatively common occurrences – the average annual decline from a peak to a trough since 1980 is close to 14%. But such a decline in barely a month is noteworthy, not for its depth but its suddenness.

As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, and (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. (That last one is undoubtedly a problem for everyone involved in oil production, but it’s a boon to those who consume it.)

The common thread here is unknowability: we don’t know where, when, or how these phenomena will play out. And in our experience, the thing in this world that markets hate and fear the most is uncertainty. We have no control over the uncertainty,  but we can and should have perfect control over how we respond to it.

Or, ideally, how we don’t respond. Because the last thing in the world that long-term, goal-focused investors like us do when the whole world is selling is – you guessed it again – sell.

This, too, shall pass.

Fred

P.S. If you have any concerns that you would like to address further, please call us at 225-922-9955.