As of the midpoint of the year, global stocks are down about  7.1% year‐to‐date. This statistic, in isolation, isn’t uncommon on a historical basis, given what we know about stock market volatility. However, the path to high single digit losses year‐to‐date couldn’t be more unique. 2020 has presented us with a roller coaster ride of market behavior which, for the most part, can be separated between the first and second quarters.  

During the first three months of the year, economies across the globe were thrown into lockdown amid the coronavirus pandemic. Financial markets reacted to this circumstance with panic, triggering stock exchange circuit breakers (15‐minute trading halt when the S&P 500 drops more than 7% in a trading session) for the first time since 1997. In a period marked with record high volatility, global equity investors experienced pain, ending the quarter down 22.4%.  

During the second quarter, investors shifted their tone, reacting to unprecedented fiscal and monetary stimulus measures. Governments and central banks around the world fired off their stimulus bazookas to support weakened economic conditions and stressed financial markets. These measures, along with signs of global re‐opening, were taken with optimism from investors, as global stocks recovered 19.8% during the second quarter.

Investors who were able to stomach first quarter losses were rewarded for keeping their poise, while those who called uncle near the market bottom in March are likely feeling a great sense of FOMO (fear of missing out). This year has been a reminder of just how important it is to stay the course and focus on long‐term investment objectives, not short‐term news headlines.

As if 2020 wasn’t crazy enough, need we be reminded that we still have a presidential election coming in November? If the first half is any indication of the second, the wild ride of 2020 could be far from over. After everything we’ve endured so far, we believe it’s more important than ever for investors to remain diversified and committed to their long‐term investment strategy.  

Sources: FRED, The Conference Board, Morningstar Direct, Global Stock performance is measured by the MSCI ACWI Investable Market Index. 

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