Perspectives Newsletter: Q1, 2020
As the year began, optimism was high after markets posted 30%+ gains in 2019 - lengthening the bull market and economic expansion into record-setting territory. Trade frictions were fading and the primary challenge to the on-going bull market was thought to be the November election. By the end of March the bull market was dead and the economy was in recession, shut down by the government in response to Covid-19 and then buffeted by an unexpected oil price war between Russia and Saudi Arabia. The speed at which the market went from all-time highs to a bear market, 22 trading days, was the quickest in history. Along the way markets opening “limit down” and tripping circuit breakers became a near daily occurrence. Panic selling was the norm. In this negative environment, growth stocks handily outperformed value, owing to laggards like energy and banks which weighed down the value index. Stocks further down the capitalization scale were particularly hard hit as their ongoing viability was called into question. A strong 15% rally in domestic markets in the final week of the quarter was sparked by unprecedented efforts from the Federal Reserve and Federal government to prop up the economy and blunt the financial impact of the virus...
