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A Message from HFG Founder: Market Update

As a group, our clients have done a great job of evaluating this recent market downturn as an opportunity rather than a disadvantage. Our advisors are receiving more calls about adding new money to portfolios (more specifically to equities) than calls to sell, but for those who don’t share the same sentiment, I don’t want to minimize your concerns or feelings. So, let’s talk through what is happening.

The US stock market declined 10%, which just happens to be the largest one-day drop since the Black Monday of 1987 (-23%). The coronavirus continues to foster uncertainty in the global economy and the news of travel restrictions and cancellations of sporting events, such as the NCAA March Madness, have elevated concerns to what may feel to some as uncharted territory. So, let’s revisit history.

Our nation has faced AIDs, SARS, the Cold War, World Wars, hurricanes, and presidential assassinations. It’s hard to deny the pain caused by each of these events, yet our economy has never failed to push forward. We don’t need to have 20/20 vision to be successful investors. We don’t need to have answers to the questions “When will the market bottom?” “How long will this pandemic last?” and “What will happen to GDP?” What we need is to tap the rational side of our thought formation and recognize that, in time, this too shall pass.

According to Ned Davis Research, this is the twenty-fifth 20% decline in the US stock market as measured by the S&P 500 since 1926. Which means, as severe as the whiplash has been, it is more common than we realize. As Exhibit I illustrates, after a fall of 20%, stock returns averaged over 11% the following decade.

We need to understand that with or without the virus, consumers continue to need goods and services for daily living. These goods and services are provided by global companies and owning a piece of the global economy through stocks has been—and will continue to be—the best method to create income and build wealth. You won’t find catchy teasers coming from us like the one I saw on Yahoo: “3 Rules for Investing in a Volatile Market.” Unfortunately, we can’t summarize market turmoil into a simple solution. What we have done for our clients is build diversified portfolios that will allow them to weather this market decline, just like in 2008, 2000, 1990, and 1987. 


If you are part of the group that sees opportunity and have additional funds sitting idle, now may be the time to make additional investments. If you are part of the group that is nervous and concerned, remember your portfolio has both stocks and bonds. Bonds are your ballast and provide cash flow and liquidity. They are your “safe bucket” of wealth. Whether you have new money or are uncertain about your existing strategy, we encourage you to contact your advisor.

In closing, our recommendation is to stay the course and, where appropriate, continue rebalancing the portfolio to take advantage of opportunities. Warren Buffet once said, “We simply attempt to be fearful when others are greedy and to be greedy when others are fearful.”

Until then, live life well and know we are here if you need us.

Ty Haberling, CFP®

PS: If you have a friend that is ringing the panic button, have them give us a call.


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.