Shrinking portfolios will recover

We would never have anticipated the duration and depth of pain we’ve seen in the stock market since the beginning of the pandemic. And, at this point, I think another drop of 10 to 20 per cent isn’t out of the question.

For seniors nervously watching a decline in their retirement savings, I know this isn’t what they want to hear. But there is hope, since a long, arduous recovery, I believe, isn’t in the cards.

Many economists anticipate that another bull market is just around the corner, and the decline in your portfolio won’t last long. This crisis isn’t like any other we have witnessed in the past, and I would caution new investors against using traditional stock market measures to try to time a market entry.

When we first experienced the effects of the coronavirus on the stock market, together with the oil crisis, we saw an explosive downturn that was unprecedented, and in some respects, unexplainable.

We know the market is reacting aggressively one way or the other, but most economists believe we’ll see it rise just as fast as it declined.

The recovery will involve a few clearly defined stages. Initially we should see a defensive market reaction to change for approximately four to six months, followed by a market recovery of 40 to 50 per cent that will take 12 to 18 months.

Only after this stage will we begin to see the beginning of our next bull market, which is predicted to last three to five years. There’s no doubt we’ll see the market reach higher highs than we ever anticipated a few months ago before the coronavirus pandemic.

Unfortunately, “you can only control what you can control.” If history has shown us anything, it’s that this crisis, like all others, will pass, and we’ll come out of it stronger and more resilient.