Good Afternoon-
Late Thursday, The World Health Organization declared the coronavirus outbreak an international health emergency. This and other negative news about the coronavirus finally moved the US and Global stock markets sharply to the downside.
Another negative catalyst looms large on Monday. The Chinese stock market has been closed since Jan 23rd to celebrate the Chinese New Year. When markets reopen Monday, you should be prepared to see increased volatility, and global markets moving downward.
Since mid-October of 2019, US markets have risen steadily, setting record highs almost daily. It would be perfectly normal for US stock indexes to correct 10 – 15% to the downside after such a move, even without the coronavirus providing fuel to the fire.
We began preparing for a correction several weeks ago, trimming positions and raising cash in client accounts. Most clients have between 20 – 30% of account values in cash currently.
We will remain patient and I am still optimistic for the balance of the year. Markets must go down as well as up, and these corrective events give us an opportunity to buy companies at lower prices than we could several weeks or months ago. I expect at some point in the next 30 to 90 days we will have chance to do just that.
If you feel the need to speak to me about anything do not hesitate to call.
Carlton
