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One Year After The March 2020 “Market Bottom”

The last twelve months have been interesting, to say the least: lockdowns, a freefalling economy and market, and the awkward handshake/fist-bump/friendly wave.

With all that has happened, I think it’s worthwhile to reflect on the lessons we’ve learned since March of 2020.

Stay invested in the market and don’t invest based on emotions. At one time or another last year, the thought of “this time’s different” or “should I sell out and salvage what I can?” crossed every investor’s mind. With a global market decline of 35% from February to the market low on March 23, and a lockdown of the global economy with no end in sight, I would be hard-pressed to find an investor who didn’t ruminate on these thoughts for at least a moment or two.

Here at HFG Trust, we were struggling with the same questions and emotions. We had no crystal ball to peer into the future, but regardless of the investment climate, we try to practice what we preach: Invest in an appropriate portfolio based on your financial plan, stay invested for the long term, and don’t make investment decisions based on emotion. With this philosophy in hand, we decided to rebalance portfolios during the drawdown, generally purchasing equities from fixed income. With the exceptional rebound in market returns over the last twelve months, in retrospect it seems like an easy decision; but at the time, it was gut-wrenching.

Some investors and pundits on TV looked like heroes as they sold on the way down. However, a majority of these investors are now still waiting for the “right time” to reinvest in the market, resulting in being underweighted in their portfolio and missing out on a large portion of the 80% increase from market lows led by US Small Value companies returning +120%.

Ultimately, no crisis or pandemic will look the same. When some say “this time it’s different,” they are correct. However, the market and economies are resilient overall; and the adaptability of companies and people results in responses that are both different and meaningful. This doesn’t mean there won’t be short-term volatility, but over time, investors are rewarded by staying disciplined.

Kevin Floyd, CFA, CFP®, AIF®

Director of Investments, HFG Trust

Risk is always taken into consideration when planning for our clients’ portfolios, with attention paid to events such as the market downturn we saw in March of 2020.

To learn more on how our firm uses evidence-based research for long-term growth, visit this page or contact us at (509) 735-7507 to schedule a meeting with one of our financial advisors.


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.