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2nd Quarter Market Commentary

Navigating Disaster and Recovery

The Bull Market of 10+ years ended with a virus—the coronavirus crisis (or COVID-19 Pandemic). Who would have guessed that “social distancing” would so greatly affect the world economy? Yes, often what you don’t know shows up to bring major changes.

Nevertheless, the stock market measured by the S&P 500 peaked on February 19, 2020 at 3386, gaining 529% (total return) or an average annualized return of 18.3% per year, lasting one month short of 11 years. This was the longest bull market since the end of World War II. It began on March 10, 2009 and lasted 131 months.

Now we are in a Bear Market. The S&P 500 declined to 2209 or 34.76% on March 23, 2020. A decline of 20% is the level required to be defined as a “bear” market. During the last full week of March values bounced up. But we are still in a Bear Market.

Now what? How long will this bear market be with us? From the peak on February 19, 2020 at 3386, the market remains down 23.7% to close the 1st quarter of 2020 at 2585 on March 31, 2020.

Believe it or not, savvy investors are looking for the bottom when the market will turn back upward and a new bull replaces this bear. There have been 11 bear markets since 1945, lasting from 3 months to 2.1 years. Total declines have ranged from 21% in 1963 to 50.9% in the great recession of 2008 – 2009.

However, the COVID-19 impact on the economy has been wide-spread and world-wide. Some industries directly impacted include airlines, cruise ships, hotels, vacation industry, gaming, fitness, religious sectors and more. Winners have been shipping and delivery, remote technology sectors among others.

What we do know about all bear markets is that the early months of a recovery are unusually marked by steep gains. But, will this bear be followed by a sharp rebound? Some analysts talk about a sharp “V” recovery, while others expect a slower “U” recovery.

Well, no one knows whether the coming recovery will be fast or slow. What remains clear is that investors who wait to reinvest, will miss early gains the market may offer. Looking at the market rebound after March 23rd, investors may have decided that the market was already over-sold and are now in a buying mood. Time will tell.

So, what are we doing? Most HARRIS & ASSOCIATES clients remain hedged, with large amounts of cash to deploy sometime near the market low. We have already begun reducing inverse holdings and adding equities. While the peak of the pandemic is expected in late April or early May, financial markets generally anticipate reality. If you think the economy will come roaring back, you may be a buyer now. Certainly, the $2.3 Trillion CARES Act legislation aims to push liquidity into the economy. So, investors who hesitate may miss the best prices of the Bear Market.

We don’t have a crystal ball to predict the future. But we do know that current prices are attractive, so we are judiciously deploying cash. As of quarter end, the firm’s client holdings are 46.1% cash, having begun selling assets February 21st. At this point, is it too early to tell if a recovery of market values has started. So, we intend to go slow. But, this is the region where bargains are available. We truly believe this coronavirus bear market provides a strong case for the advantages of tactical asset management.

Our clients are very pleased with the results so far. And, the firm has happily brought in assets from new clients whose strategy or advisor failed them this quarter.

If you would like to know more, please contact us. We will be happy to discuss your goals and concerns. If you would like a confidential review of your portfolio, call (310) 318-3700 for a phone or virtual meeting, or book your meeting online at An initial consultation is always free and without obligation.

For now, be safe, keep your distance and be kind to your family and community.




David L. Harris, PhD, ChFC, CFP®
Wealth Advisor 

A Registered Investment Adivsor

(310) 318-3700

Harris & Associates is a Registered Investment Adviser. This commentary is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Harris & Associates and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Harris & Associates unless a client service agreement is in place.

[If you would like a confidential review of your portfolio, call for an appointment, or book your meeting on-line at It is always free and without obligation.]


1 (2019, December 30). JP Morgan Asset Management Weekly Market Recap Chart & "Thought of the Week." 

2 Wesbury, Brian S. (Chief Economist); Stein, Robert (CFA-Deputy Chief Economist). (2019, December 30). First Trust Monday Morning Outlook - "The Expansion Continues."