Coronavirus Update From Our Team

This past week can be described in so many ways. Crazy, frustrating, scary, isolating. One word that shouldn’t be used to describe this situation and the market’s reaction to the situation is uneventful. We have definitely been on our toes during this time.

We thought that last Thursday and Friday were crazy…until, of course, we saw Monday. The markets continue to take large daily swings up and down due to the Coronavirus threat and have so far trended down. As of the close of business on Tuesday, the S&P 500 is trading roughly 25% off of it’s all-time high.

This marks the 13th bear market that the S&P 500 has been through. Of the last 4 bear markets, the average duration has been 17.5 months (until the S&P returns to the most recent high)  and each of the four have been followed by a bull run of 100% or more and 2 of the 4 have been bull runs of 300% or more (Reference the chart below). This reiterates our thought that this could be a good time to buy equities as well as shift some of our fixed income positions over to equities as the markets settle.

While this Coronavirus threat is a crisis that we have not seen before and is new to the markets, crisis’ themselves are not new to the markets at all.  From WWI and WW2 to Black Monday to 9/11 to the housing crisis of 2008/2009, this is not the market’s first rodeo and it surely will not be the last.

How much of this bear market is substantiated and how much of it is due to fear and panic is yet to be determined. This will be uncovered over the weeks and months to come. Many times, the market will overreact to situations when there are unknown factors in play. Once some of these unknown factors come to light, the markets should settle and normal life will be on it’s way to resumption. Some of the unknowns that will need to come to light are:

  • What is the true mortality rate of the disease and how serious is it relative to viruses that we have seen?
  • Could the virus be seasonal and give us a reprieve through the warmer summer months?
  • How will small businesses and business in general fare during this time of economic slow-down?
  • How will the measures that the Federal Government has taken be received by the market in the mid to long term?
  • Many other factors that are not mentioned here.

Actions taken by the Federal Government so far include:

  • Cutting the Federal Funds Rate to near 0%
  • Quantitative easing by the Feds (buying bonds)
  • Delaying tax payments for 90 days
  • The promise of a check to each American to boost the economy

While all of these actions should help out, likely some more than others, it may take time for the markets to be able to receive these gifts. Investors may need to see a clearer picture of the severity of the disease itself and a path to health before we see this market begin to calm and start moving higher.


I always find this graph helpful when markets are volatile. It is published each month by JP Morgan in their “guide to the market” publication. It shows, since 1980, the return of the S&P 500 each year relative to the “intra-year” decline. In short, it shows how far the market was down at some point during the year vs. where it ended up at the end of the year. While this situation is unique to us, this type of volatility is not unique to the markets.

Staying the course can be difficult for some during times of uncertainty. That is why we, at Metcalf Partners, have a job. Not only to help clients pick quality investments and plan for the situational aspect of their financial lives, but also to help people make the right decisions at the right times. Maybe even more importantly, to help them avoid making wrong decisions at the wrong time, especially when we are surrounded with uncertainty. If you have questions or concerns about your own situation or portfolio, do not hesitate to call or email us.


Important Disclosures
The information provided here is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Past performance is no guarantee of future results.
There can be no guarantee that strategies promoted will be successful and no guarantee of positive results.
The economic forecasts set forth in this material may not develop as predicted.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.