TrendCalc Capital Markets Note 2/28/2020
TC Capital Markets Note – 2020.02.28
Importance of Having a Genuine Understanding of How Capital Markets Truly Work.
This has been a wild week on Wall Street! From fears associated with the coronavirus and potential global economic impacts to political issues and more, the markets, as always, are more a reflection of investors emotions and (irrational) behaviors and inexperience.
Without a genuine understanding of how markets truly work especially in regard to the ever-changing supply and demand flows of capital (money) into and out of various capital markets, investment sectors and individual securities, it is hard to fully comprehend (or appreciate) the frequent reactionary, capricious nature of the investment markets, especially given this current week’s fears and behavior.
Fear of the unknown tends to be a bigger driver of negative markets, much more than negative news itself. No one seems to have a true actuate sense of the coronavirus yet. When investors do have a decent sense of any unknown, markets tend to settle down. I have seen this type of behavior before. History is littered with similar fears, market circumstances, fears and decision-making. Do your homework, see how markets acted and reacted in the past during similar circumstances, and look for how markets end up once the fear of the unknown settled. Ask yourself, are the 10- or 20-year prospects for US companies fundamentally different because of the activity of the last 7 days?
Over the last week or so, I have been frequently asked if I am getting a lot of calls from investors who may be a bit spooked with the current market behavior. And my answer has been no, because I spend a lot of time with each client explaining how markets truly work and how to go about making buy-hold-sell investment decisions without the negative influence of emotions and inexperience. I have experience with these current market circumstances. I was on Wall Street in NYC Oct. 19, 1987 when the market collapsed 22.6% in a single day. And I am here to guide you through this turbulent time.
Every investor has their own level of comfort and confidence with how investment markets move. There is a time to sell, to hold, and to buy. And now, at least for the time being, nothing has yet warranted change. If you lack confidence or feel fear creeping into your decision-making, maybe it is time to improve or refresh your understanding of how markets work and how to be successful with your buy-hold-sell investment decision-making. To all existing clients, remember the 3-hour investment class that I delivered in 20 minutes to each and every one of you at the onset of our client-advisor relationship. To others, not current working with TrendCalc, maybe it is time to look at a true market professional and gain a better understanding which will hopefully lead to your increased comfort and confidence about your current investments and retirement plans.
Be assured that we are here monitoring markets to best serve you, your concerns and needs. If you would like to discuss more about recent market activities and your accounts, please call us anytime. You are our valued TrendCalc client!
Philip S. Hammond, CFP
This material is not a recommendation to buy, sell, hold or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should discuss their specific situation with their financial professional.
Except where otherwise indicated, the views and opinions expressed are those of TrendCalc as of the date noted, are subject to change at any time and may not come to pass. Past performance does not guarantee future results.
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S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.