We appreciate all the calls and texts, but everyone here at Sphere had crash helmets on and seat-belts fastened this morning. Early in today's session, trading was halted due to a "circuit breaker" 7% decline of the S&P 500. These triggers were implemented after the 1987 crash to help reduce market volatility and emotional/panic selling.
However, we as a society tend to emotionally overreact to news-driven changes in market conditions. To put things into perspective, even measured from the market peak in 2007, before the historic financial crisis in 2008, the total returns of the S&P 500 including today's sell-off have been greater than 6% annualized. If you were lucky enough to have bought at the March 2009 bottom, those annualized total returns would have been north of 15%. Historically speaking, the market rewards those that maintain discipline and patience even in extreme volatility. We are reminded that high valuations make a market vulnerable to "fast and furious" pullbacks.
We've been concerned about this market's rich valuations, which is why our individual stock portfolios have been over-allocated to cash in excess of 30% over the last several months. All things being equal, valuations are more attractive today than just 3 short weeks ago. Be assured, we always monitor the market closely, currently paying special attention to high-yield credit spreads, oil & gas, travel/leisure and retail.
As always, we appreciate your trust as we navigate these challenging market conditions. We will continue to keep you updated.
The Sphere Wealth Management Team
Sphere, LLC is a Registered Investment Adviser. Advisory Services are only offered to clients or prospective clients where Sphere, LLC and its representatives are properly licensed or exempt from licensure. Investing involves risk and possible loss of principal capital. No advice may be rendered by Sphere, LLC unless a client service agreement is in place. Additional information about Sphere, LLC also is available on the SEC's website www.adviserinfo.sec.gov