Special Update: Market Volatility

In the last month, we have seen some of the most volatile daily moves in market history. From two of the worst daily losses of all time on March 12th and March 16th, to astounding recovery days on March 13th and 24th. These moves rivaled famous trading days like October 19, 1987 (Black Monday) and October 29, 1929 (Black Tuesday). This Tuesday, March 24, saw the Dow Jones Industrial Average surge by +11.4%, its biggest daily gain since 1933.

If we scan the list of biggest daily moves, the largest loss days and the largest gain days all happen in the jaws of a bear market. We expect this for down days, but even the biggest up days have dates in the 1930s (Great Depression), 1987, 2008 (Financial Crisis), and now, 2020 (Coronavirus).

While we won’t complain about the big up days (and will only quietly grumble on the big down days), more important is looking forward to the base building of a new cycle, which will come at some point. October 2008, one of the most volatile periods in market history, gave way to March 2009 and the beginnings of the longest bull run in history. Are we beginning to build that base now, or will it be another 6+ months? Either way, we are comfortable with the quality of our holdings to wait it out.

While we deal with the current volatility, both good and bad, we encourage you to call in and discuss your portfolio. We can take advantage of the recent pullback to rebalance your accounts at attractive valuations. It’s also an ideal time to double check that the risk tolerance we use in your investment plan matches with how you’re feeling in this real-world bear market. Feel free to contact any one of our team members at (406) 839-2037 to have a conversation.

The views expressed in this newsletter represent the opinion of Allied Investment Advisors, a Registered Investment Adviser. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment or services. The information provided herein is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results. Investments are not a deposit of or guaranteed by a bank or any bank affiliate. Please notify Allied Investment Advisors if there have been any changes to your financial situation or investment objectives or if you wish to impose or modify any reasonable restrictions on the management of your accounts through Allied Investment Advisors.