With the conclusion of the month of April I did not want to miss the opportunity to momentarily pause and acknowledge what we have all just witnessed:
A leveling out of coronavirus hospitalizations, rising hopes for a treatment along with a partial reopening of the economy sparked a steep rebound in the stock market this month. The S&P 500 increased in value more than 12%, posting its best month since 1987 and its third-best month since World War II.[1] Please pause here and reflect for maximum effect: That’s a more than 12% return in one month! April was the third best monthly return for the stock market over the past 75 years.[2] Put another way April was the 3rd best return for the S&P 500 out of the last 900 months! What anAbsolutely Amazing April is was!
Besides celebrating a good month for the stock market, my point of all is this is to reiterate what I spoke to you about a couple of weeks ago regarding volatility. Here’s what I said, “Volatility is defined as a tendency to change quickly and unpredictably in either direction. It is important to note that volatility is the market going both UP and DOWN. Although it has a negative connotation, volatility is not inherently negative.” The month of April has just given us a clear example of positive volatility which directly followed the negative volatility of February and March.
The lesson here is best illustrated with an analogy: The volatility of the stock market is like a roller-coaster. The ride goes up; the ride goes down. It is sure to both thrill and scare you along the way. The only way to truly hurt yourself is to jump off the roller-coaster while it is moving. However, if you stay harnessed in you are sure to finish the ride safely. Congratulations for staying harnessed in.
Please do not hesitate to email or call me with specific questions pertaining to your investment plan and long-term goals.
Stay safe and healthy.
Sincerely,
Gavin
[1]S&P 500 Historical Prices by Month, www.multpl.com/s-p-500-historical-prices/table/by-month
[2]Pippa Stevens, Maggie Fitzgerald. “Stock Market Live Thursday: Dow Drops Nearly 300, Best Month since 1987, Historic Volatility.” CNBC, CNBC, 30 Apr. 2020, www.cnbc.com/2020/04/30/stock-market-live-today.html.
[1]S&P 500 Historical Prices by Month, www.multpl.com/s-p-500-historical-prices/table/by-month
[1]Pippa Stevens, Maggie Fitzgerald. “Stock Market Live Thursday: Dow Drops Nearly 300, Best Month since 1987, Historic Volatility.” CNBC, CNBC, 30 Apr. 2020, www.cnbc.com/2020/04/30/stock-market-live-today.html.