Andrà tutto bene. It is an expression being used increasingly across Italian social media amidst the severe COVID-19 breakout in that country. Translated, it means “everything is going to be all right.”  It’s a message of hope, a message of strength, and a message of looking ahead to better days.

We could use some optimism these days. The news has been extremely difficult on a personal and human level, never mind economically.  We are worried about our families, friends, and community without any clear answers. Frankly, nothing we say from here onward is more important than the safety and well-being of you and your families during this crisis.

We also feel the effects that this pandemic is having on our financial health. Amidst this significant disruption and shutdowns, it’s not surprising that the global financial markets have been increasingly volatile since the outbreak of COVID-19.

The sudden lack of visibility on corporate earnings in 2020, broad-based pressure on institutions seeking near-term liquidity, hedge fund de-levering, and margin calls has created an environment in which many stock and bond prices fell indiscriminately. As a result, the selling pressure on equities was significant and across the board. Other than U.S. treasuries, many fixed income categories declined as well amid a lack of liquidity. A collapse in oil prices exacerbated the declines.

Data Ending 3/31/2020 (not annualized if less than 1 year)

Equities Indices Q1 2020 1 year 3 years 5 years 10 years
MSCI ACWI (All Country World) -21.3% -10.8%  2.1% 3.4% 6.5%
S&P 500 (U.S. Large Cap) -19.6% -7.0% 5.1% 6.7% 10.5%
Russell 2000 (U.S. Small Cap) -30.6% -24.0% -4.6% -0.2% 6.9%
MSCI EAFE (International Developed) -22.7% -13.9% -1.3% -0.1% 3.2%
MSCI EM Emerging Markets (International Emerging) -23.6% -17.4% -1.3% 0.0% 1.0%
Fixed Income Indices          
FTSE World Government Bond Hedged (Global Bonds) 4.0% 8.9% 5.4% 3.8% 4.2%
Barclays U.S. Aggregate (U.S. Investment Grade Bonds) 3.2% 8.9% 4.8% 3.4% 3.9%
Barclays Municipal Bond 5Y (4 – 6) (Municipal Bonds) -1.0% 2.2% 2.4% 2.1% 2.8%
Barclays U.S. Corporate High Yield (U.S. High Yield) -12.7% -6.9% 0.8% 2.8% 5.6%
Other Indices          
S&P Developed REIT (Global Real Estate) -28.4% -22.1% -3.0% -0.7% 6.5%
HFRI FOF: Conservative Index (Diversifiers) -0.2% 2.8% 2.6% 1.9% 2.6%

Source: Zephyr Analytics & Morningstar

The speed to the decline was equally dramatic. Between February 19 and March 23, the S&P 500 fell 34%. The index recovered 16% in the last week of March to finish down about 19% for the entire quarter. It was the fastest decline to a “bear market” in market history.[1]

Why did this happen so fast? In addition to the virus, the heightened valuations and strong returns coming out of 2019 started the engine of decline, while short-term traders, institutions, and corporations stopping share buybacks stepped on the gas pedal.

Record-breaking swings during March were certainly difficult to stomach. The daily swings in stock prices were nothing short of historic and many of the best and worst days were clustered together:

  • On 3/16, the S&P 500 was down 12%, and on 3/24 it gained 9%.

  • Eight out of the 15 largest-ever point losses for the Dow Jones Industrial Average occurred during March 2020.[2]

  • What may be less obvious is that seven out of the 10 largest-ever point gains also occurred between March 1 and March 31, 2020.[3]

This speaks volumes on why you cannot try to time the market, as the up days can be as fierce and fast as the down days.

Sowing the Seeds of Hope and Recovery

While we don’t know the precise timing and degree to which this market will ultimately bottom, we do know from history that crises can create opportunity for patient long-term investors who can execute to their investment strategy and financial plan amidst these rough waters.

A promising area in recent news is the record-level of stimulus announced by both the Federal Reserve and Congress, as well as some other developments that may point to eventual stabilization in the markets:

  • The recently signed Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) reportedly is worth over $2 trillion, or about 10% of U.S. GDP[4] and nearly three times as big as the 2009 stimulus package.

  • The Federal Reserve’s monetary stimulus is greater than what we witnessed cumulatively both during and after the entire financial crisis.[5] Lower interest rates, credit facilities and programs are designed to help stabilize and increase liquidity of bond markets for businesses, banks and financial markets.

  • The U.S. is not alone – other countries around the world have also introduced significant stimulus packages of their own, which in aggregate could represent an unprecedented $7 trillion in fiscal stimulus globally.[6]

  • The U.S. economy had been in relatively good shape: In early March, the Atlanta Federal Reserve Bank had projected 3.1% real GDP growth in the first quarter.

  • The Fed’s quantitative easing, plus the fiscal stimulus, plus the support from central banks globally, have all gone a long way to easing the dislocations in equity and bond markets.

To put the fiscal stimulus in context, the US economy has a Gross Domestic Product of about $21 trillion, or $5 trillion per quarter give or take a billion. The $2.3 trillion fiscal stimulus approved by Congress is roughly 50% of one quarter’s GDP.[7] We believe the massive global stimulus being sown today will eventually bear fruit and, while not perfect, should help bridge the gap across a financial chasm for many consumers and businesses.

While it’s still unclear when we will see stabilization in the markets, the odds favor that these potent stimulus seeds will help lead the global economy into a much faster and stronger period of recovery than would be possible without it. If we’re right, we would expect financial markets to anticipate this recovery before we see it in our day-to-day lives.

During a Crisis, an Investment Strategy Is Critical

What’s next? We know that there are unprecedented factors in this crisis that are likely to cause continued strain on the economy and markets in the near term. Depending on new developments, the markets are just as likely to return to where they were at the end of March as they are to continue to recover. There are many questions still to be answered: from when the coronavirus curve will flatten to if we’ll experience a second wave of contagion, how the markets will respond to corporate earnings and GDP reports, when businesses, organizations and communities can operate near or at pre-COVID-19 levels, when individuals will get comfortable returning to their normal routines and how long unemployment will remain at such historically high rates. We don’t know the answers to these questions.

But we do know that a recovery will occur – eventually. And your investment strategy becomes even more invaluable during times like these. The strategy is the roadmap to help get you to important objectives in your life – objectives you have set in place recently or in years past. Inevitably, perseverance is often needed to ride out curves and pitfalls along the path. With a focused strategy, you stand a much better chance of reaching your destination.

That’s where we come in. Take comfort in knowing that whatever situation or crisis you may be going through personally, now or in the future, we at Modera continue to work hard every day to help you manage your financial lives and work toward your objectives. That’s one less thing you need to worry about during trying times like these.

We thank you for the trust and confidence in our services. Andrà tutto bene.

Modera Wealth Management, LLC (“Modera”) is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.

For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site ( A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money.

This quarterly commentary is limited to the dissemination of general information pertaining to our investment advisory services and financial planning services and general economic and market conditions that is not suitable for everyone. The information contained herein should not be construed as personalized investment, financial planning, legal, tax or accounting advice. For legal, tax and accounting related matters, we recommend that you seek the advice of a qualified attorney or accountant.

The returns shown in table 1 are annualized returns, except for periods less than one year, for selected asset classes as represented by benchmark indices. Investors cannot invest directly in an index. Unmanaged indices do not reflect management fees or transaction costs associated with some investments. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed herein will come to pass. This document contains forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. Readers are cautioned not to place undue reliance on forward looking statements, which speak only as of the date of this document.

Investing in the equity and other markets involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered a solicitation to buy or sell any security or to engage in a particular investment or financial planning strategy. Individual client asset allocations and investment strategies differ based on varying degrees of diversification and other factors. Diversification does not guarantee a profit or guarantee against a loss. Not all asset classes or funds discussed herein are held in all Modera client accounts, and the asset classes and indices discussed in this quarterly letter were selected for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell any securities. The performance of Modera client accounts may differ depending upon actual composition.

S&P data © 2020 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. FTSE Russell is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2020, all rights reserved. Bloomberg Barclays data provided by Bloomberg.