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April began on a sour note for stocks as each of the indexes listed here lost value. Economic reports reflected the negative impact of the COVID-19 pandemic. There were more than 700,000 jobs lost in March while total claims for unemployment insurance benefits soared to nearly 18 million. A cut in production didn’t prevent crude oil prices from hitting negative numbers as demand waned and storage neared full capacity. Purchasing managers saw manufacturing hit lows not seen in more than ten years.

The federal government continued to try easing the economic strain on individuals and businesses. The Paycheck Protection Program and Health Care Enhancement Act replenished the Paycheck Protection Program, provided funding for additional small business loans, offered financial support to hospitals, and increased the availability for more virus testing. The Federal Reserve added trillions of dollars in funds to its lending programs for states, cities, and midsize businesses. But the economic strain prompted a few states to begin the process of easing lockdown restrictions and reopening a range of businesses, in lieu of stay-at-home restrictions.

did you know?

Emotional decision making leads even the most informed investors to act at the worst times—buying high and selling low. The average investor consistently under-performs the market, with 20-year annualized returns from 1999-2018 as follows: Emoji Stock Market

  • 9.9% REITs
  • 7.7% Gold
  • 5.6% Us Stock
  • 4.5% Government-related jobs
  • 4.0% International equities
  • 3.4% Homes
  • 2.2% Inflation
  • 1.9% Average investor

Source: Bloomberg, June 30, 2019. Average asset allocation investor return is based on an analysis by DALBAR, Inc., which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Indices shown are as follows: REITs are represented by the NAREIT Equity REIT Index, U.S. Stocks are represented by the S&P 500 Index, International Equities are represented by the MSCI EAFE Index, Government-Related Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index, Homes are represented by U.S. existing home sales median price, Gold is represented by the U.S. dollar spot price of one troy ounce, Inflation is represented by the Consumer Price Index. Indices are unmanaged and cannot be purchased directly by investors. Index performance is shown for illustrative purposes only and does not predict or depict the performance of any investment. Past performance is no guarantee of future results. 

bright ideas
Unprecedented Waters
Historical Perspective of February-March 2020 Market Volatility

At Beacon, we have been saying for years that volatility is the new normal, and never has this been more true than in 2020. February and March presented both the equity and fixed income markets with absolutely unprecedented occurrences never before seen in history. As you meet with clients and prospects, here are some key talking points to keep in mind to provide perspective.

On the equity side, we had the fastest market decline in history, surpassing the sell-off heading into the tech crash, the financial crisis or even the Great Depression. From the February 19, 2020, market high, it took the S&P 500:

  • Only six days to turn into the fastest market correction with a 10% drop
  • Only 20 days to reach the fastest bear market in history at a 20% drop and
  • Only 22 days to the fastest 30% sell-off in history

Where do we usually hide during these times of equity market crisis? Fixed income has been the answer, posting positive annual returns in every bear market in history—until 2020. All fixed-income instruments were hit with severe price dislocation due to a global liquidity crunch. Even US Treasuries—which are widely considered the most stable and liquid security in existence—saw unprecedented volatility.

  • Price-to-bid spreads for US Treasuries were some of the widest and fastest ever seen:
    • Ultra Long Term US Treasury Futures were down more than 7 points in just one day (March 12)—more than five times their normal averages.
    • $23B iShares 20+ Year Treasury Bond fund’s price ended down 5% below the value of its assets on March 11. In its nearly 18 year history, the average difference between its price and the value of its assets has been .03%. That is 166 times its average dislocation!
    • The bid-to-ask for 10-Year Treasuries widened to 30-40bps in March, versus its normal range of 1-3 basis points.
  • Corporate bond spreads widened quicker than ever with 1- to 3-year bonds reaching 330bps.
  • These historical events were met with unprecedented moves by the Federal Reserve.
    • The target rate was cut basically to zero.
    • Quantitative easing was initially announced at $500B before becoming uncapped.
    • Liquidity facilities and repo action were at half a trillion dollars, twice the daily record set during the financial crisis.
    • And for the first time ever, the Fed can now buy corporate bonds and corporate ETFs!

What happened in the fixed income market in March was truly off-the-charts rare, a 10 to 11 standard deviation event, according to Vanguard’s Global Head of Credit Fixed Income. Statistically, a 10 standard deviation occurrence should occur twice every 1,000 years, and an 11 standard deviation event should occur five times every 10,000 years.

For all this historical data and more, watch a 7-minute video from Beacon Managing Director Dan Baccarini, or download the presentation for more key statistics and sources.

Where do we go from here?

Emotional-decision making is a critical danger to all investors, but now even more so than ever in these unprecedented times. The need for a consistent, mechanical approach to minimize losses before they become catastrophic as well as a consultative, educational approach for proactive communication with clients has never been more essential. Reach out to your Beacon Representative to discuss how they can help support your business.

beacon news

Take advantage of these client-approved pieces you can use right now to engage in meaningful discussions with your clients:

The Reality of Returns – Math of Losses

Coronavirus Devastating Retirement Dreams

2.0 Timeline Summary

Be sure to visit Beacon’s News & Press page and the Advisor Toolbox for the latest credibility pieces to share with your clients and prospects, and follow Beacon on LinkedIn for the latest updates as they happen.


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For Advisor Use Only, Not to Be Used With Clients

The GIPS Compliant Presentations for our Vantage portfolios can be obtained by clicking on the link below.  If you would like the Compliant Presentations to be emailed directly via PDF file or if you would like to receive a copy of Beacon’s Composite Descriptions; please respond to this email or contact Beacon at 937-439-9093.

BCM 2018 Compliant Presentations

Beacon Capital Management, Inc. is a registered investment adviser with the Securities and Exchange Commission. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, notice filed, or excluded or exempted from registration or notice filing requirements.

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Beacon Capital Management

7777 Washington Village Drive, Suite 280, Dayton, OH 45459

P: 866.439.9093 | F: 937.424.4825