BREAKING: Letter to Our Clients at Jason Howell CompanySubmitted by Jason Howell Company | Developing High-Net-Worth Families on February 28th, 2020
On Friday, February 28th, 2020 8:23 AM, we sent a letter to our clients so they heard from us regarding the greatest stock market volatility since the Great Recession of 2008. This is the time when our family of clients rely on our expertise the most. And we are happy to serve. If you or a family member has been worried about the markets, feel free to share our message.
Dear Family of Clients,
This week's stock market fluctuations have been notable. Though we don't like to see drastic market declines, 10% market value reductions or "corrections" are normal and typically recurring. A correction like this has been expected for at least 5 years. To read our general views on market volatility, please take note of the blog post we drafted earlier this week: DOW Down 1,000 Points! "Round up the usual suspects.." For more of our opinion since Monday, read below.
Most "corrections" (10% or more stock declines from the previous average highs) begin with uncertainty. This week the uncertainty came from inconsistent news regarding the coronavirus. No one knows how many are truly infected in China and no one knows how long this virus will continue spreading. Neither the White House staff nor the Centers for Disease Control (CDC.gov) can accurately predict how quickly it will get to and/or spread throughout the United States. Neither of course can we. The markets are reacting to this indecision.
The stock market is not a predictor of what's happening today but what the expectations are for the future. If stocks are "up," it's because analysts - people who are paid to predict the future (for whatever their opinions are worth) - believe that those companies will grow. It's also typically a belief that the overall economy will grow. The biggest concerns baked into the fear of the coronavirus is not truly that we will all get sick. It's well noted that the annual flu season is by many multiples, more deadly than the current strain of the coronavirus. The economic concern however is that the centers of manufacturing like China and South Korea are going "off-line" and may not be able to produce the products that many of the multinational firms - that make up the majority of the stock market - rely on. If you can't make products, you can't sell them. So the "analysts" are logically predicting lower sales and lower profits for the future. The more they do that, the more stocks go down.
Like every other industry, technology is speeding things up in the financial world. We're not experts on artificial intelligence but we understand that "bot" trading is a growing part of our financial industry. The ability to react immediately to news stories is hastened with the use of programmable technology. The only problem is any news can "initiate" trading. Last year, a tweet from the White House about China trade fears would move the market 1 - 2% in minutes. Now we have the uncertainty of "Breaking News" of a "Pandemic" from a "Virus" that's "spreading." We are witnessing how this speedy "bot trading" is affected by our 24 hour (24 second?) news cycle; especially when it's bad news.
INVESTING vs. TRADING
As we mentioned in Monday's blog post, we see you as investors, not traders. Traders typically seek immediate gain, have to make educated guesses about the market and eventually guess wrong. Plus "traders" sounds a lot like "traitors" and that can't be good. Investors follow a personal plan with an academic foundation that helps them achieve short-term and long-term goals. In the long term, the stock market goes up; over time, it always has (and will as long as there is potential for economic growth on Earth). To be a successful investor, you need great planning, good timing and time. If you are unsure of how your plan fits with your timing (and the times we are facing), just call us. Call me: 703-867-2387
Rest assured that Doug and I are monitoring the stock market situation and we are confident in the plans we have put in place for you. We have been waiting for this moment to be here for you when you need us most.
Thank you for being a part of our family of clients.
JASON & DOUG
Jason Howell Company is an independent, family wealth management firm run by two owners who consider it their family business. Jason J. Howell, CFP® and Douglas W. Tees, MBA are both married to patient wives and are dedicated to their kids. They have built a firm with a great reputation based in Northern Virginia and in 2019 the firm ( founder) was listed as a TOP WEALTH ADVISER by WASHINGTONIAN magazine. They hope to pass JHCo. on to their children someday.
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