At this morning’s opening level of 2,764, the S&P 500 is down over 18% from its all-time high, recorded on February 19. Declines of that magnitude are fairly common occurrences – indeed the average annual drawdown from a peak to a trough since 1980 is close to 14%. But such a decline in barely a month is noteworthy, not for its depth but for its suddenness.
As we all know by now, the precipitants of this decline have been (a) the outbreak of a new strain of virus, the extent of which can’t be predicted, (b) the economic impact of that outbreak, which is equally unknown, and (c) most recently, the onset of a price war in oil. That last one is surely a problem for everyone involved in the production of oil, but it’s a boon to those of us who consume it.
The common thread here is unknowability: we simply don’t know where, when or how these phenomena will play out in the short run, however, we are confident in the outcome in the long run.
Over the past 12 years, Edgepoint has sent out an article entitled, “What Helps Us Sleep at Night” during periods of high market volatility. The latest release, Part 6, was sent to us over the weekend and we thought that you would appreciate understanding the logic behind five of the holdings inside the Edgepoint Global portfolio. Please click here to access the PDF of the article 2020 March- What helps us sleep at night part 6. You can also read it on the EdgePoint website (choose Document #6).