Chart Talk: February 21st, 2024


It was four yearsago Monday (Feb 20, 2020) that the S&P 500 marked its pre-pandemic peak of3,386 prior to declining 33.92% over the following twenty-five trading daysbefore settling at 2,237 on March 23.  Aswith many other events occurring during that time, for us, the precipitous dropin the stock market was quite stressful. At the time we were writing article weekly for a couple of localnewspapers.  The following representsseveral paragraphs that appeared on March 29, 2020.

 “Investors have to ask themselves – after this thirty plus percent bear market over thepast month, would it be better to continue to work on my ark or turn myattention to an upturn in the financial markets, a lifeboat?  Before opting for the former, keep in mindthe following:

 Those that panic now may very well fatally compromise their long-term financialwell-being.  Neither panic nor hope is aviable strategy.  Allocate your portfolioin accordance with your long-term objectives and maintain that allocationwithin a few percentage points, unless your objective or situation changes.

 This is a crisis that straps the income of Americans over the near-term.  It is not like 2008, which was one of thebalance sheet (too much debt).  Inaddition, unlike 2008, once having identified the magnitude of this health carecrisis, the monetary (Fed & Treasury) as well as fiscal (congress and theTrump Administration) authorities have responded quite powerfully.  This should help shorten the economic impactfrom the outbreak.

 From an article written by Jason Zweig that appeared in the Wall Street Journal onMarch 19, 2020.  ‘Stress is going to makeinvestors less of who they are, an impoverished version of themselves.  It causes you to fall back on simpler methodsof approaching your world.  You have adecreased ability to use your previous experiences and knowledge to make smartchoices in new settings.’  PeterSokol-Hessner (cognitive neuroscientist at the University of Denver).

 Looking forward, expect more volatility.  Perhapsthere will be many bounces and false starts prior to a true recovery.  Regardless, when the bottom comes it will bepowerful and lasting.  We also believe itmay ultimately bring with it a rapid period of economic growth and innovation.”

 As the chart below indicates the bottom that occurredduring March 2020 has been a lasting one with the S&P 500 having risen by46.54% or by an average of 10.00%, quite consistent with the longer-termhistorical norm.  After such a rally thechallenge now is to set the fear of missing out (FOMO) and greed aside andfocus on the long-term objectives, as you did during those initial dark days ofthe pandemic.

This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.

Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”

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