- Last week was one for the history books as the Dow plunged more than 3500 points and interest rates as measured by the 10 year Treasury saw a low that hasn’t been seen in 100 years – 1.116% intraday on Friday. The spread of the coronavirus has created the vast majority of the panic selling, but general profit taking from frothy levels the beginning of February added to the decline as investors tried to capture gains from 2019 and into January and February. The move prompted Fed Chair Powell to state that the Fed will “act as appropriate”, and now three rate cuts are being priced into the market. As we stated in our email on Friday, panic selling is not a good investment philosophy. We continue to let our asset allocation process dictate our moves, haircutting winners when times are good and buying the losers in times of panic (now). According to Bespoke Investment Group, of the prior 14 occasions when the market sold off more than 10% in a week, 12 times the market was positive the following week and the next 4 weeks showed average returns of 2.92%. Markets are rallying today as the sellers have currently exhausted themselves. https://www.cnbc.com/2020/02/28/plunging-rates-in-the-us-are-rewriting-the-history-books.html
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