Looking Beyond the Coronavirus Valley

Among the myriad takeaways from the abysmal market this week, one thing is very clear: economists and investment strategists make poor epidemiologists. I stand before you, guilty as charged. That said, I take comfort in some of the data our Cresset team has gathered on previous virus outbreaks for a client call we conducted yesterday.

All the previous outbreaks were scary at the time, triggering downdrafts between the mid-single digits and mid-teens. The coronavirus selloff could in fact breach bear market territory. The drawdown cycles lasted anywhere from 38 trading days to 141 trading days. One conclusion we gleaned was we must look past the valley. In all of the previous cases, the S&P 500 was higher one year after the initial outbreak.  We must remind ourselves that equity investing requires a long-term time horizon; at Cresset, we require a minimum of seven years. Keeping that perspective offers us assurance that the virus will eventually run its course and normal business activity will resume.

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Cresset is an independent, award-winning multi-family office and private investment firm with more than $45 billion in assets under management (as of 04/01/2024). Cresset serves the unique needs of entrepreneurs, CEO founders, wealth creators, executives, and partners, as well as high-net-worth and multi-generational families. Our goal is to deliver a new paradigm for wealth management, giving you time to pursue what matters to you most.

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From Chief Investment Officer, Jack Ablin.
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