Investors like labels for the economy and financial markets—many of them with the word “great” in them. The Great Depression. The Great Recession. The Great Lockdown. Well, we’ve moved into what we might call the Great Disconnect. How can stocks have rebounded so strongly in the last month amid so much suffering and economic damage? What’s Wall Street seeing that so many on Main Street are not?

For one, in the United States more than 20 states have already begun to reopen their economies, and others have plans to begin very soon. In Europe, lockdowns are being eased, following Asia’s lead. Even gradual progress like this may help the stock market focus more on what’s ahead than where we are right now.

As lockdown restrictions are lifted, timely indicators like vehicle traffic, electricity consumption, public transportation use, daily consumer confidence surveys, and a wide variety of weekly economic indicators point to a low mark in economic activity in the United States in April. The “Great Lockdown” recession of 2020 may be over already—although it may not be officially declared a recession for several more months.

Nowhere to go but up isn’t normally very reassuring, but to the stock market it may be. Historically, when things have looked their worst, the opportunity in stocks has tended to be the best. The S&P 500 Index has usually hit its bottom and started the climb back up about five months before a recession has ended.

Other factors have helped boost investor sentiment recently. Market participants have gained confidence from the bold stimulus response from policymakers in Washington, DC, and the Federal Reserve. The total amount of the stimulus this year is about 22% of the entire US economy, based on gross domestic product (GDP). During the entire 2008–09 financial crisis, the total amount of stimulus was 16.6% of GDP. And there may be more. Surging unemployment and weakening finances at the state and municipal levels may be catalysts for more action. Though millions of jobs have been lost to this crisis, many millions surely have been saved as well.

The medical community also has provided reasons for optimism. Though no one knows for sure when a COVID-19 vaccine will be ready, rapid progress is being made, and several promising candidates are now in human trials. Testing capacity has also ramped up, while some of the best capitalized and most innovative companies in the world are developing contact-tracing tools to help facilitate safe re-openings. While stocks may have come a bit too far, too fast in the short term, markets are clearly responding to these positive developments.

Reopening the US economy will be a gradual process, and temporary setbacks may be possible. Some of the lost jobs may not return. The possibility of disappointment as the “Great Reopen” unfolds is real. We are facing a tremendous challenge, but it is being met with incredible resilience, resourcefulness, and innovation. Together we will get through this crisis and return to better times.

Please take care, and don’t hesitate to contact me if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 6, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-05007832

“Life is 10% what happens to you and 90% how you respond to it.” — Lou Holtz, Hall of Fame football coach

As the battle against the COVID-19 pandemic continues, how we respond to it will determine how we beat it. Continued sacrifices range from everyone in the medical community working on the front lines to the thousands of truck drivers across our country keeping goods flowing, parents who have become homeschoolers, and folks missing their family events to help stop the spread of this terrible outbreak. As Lou Holtz said, we can’t control what happens, but how we respond to it is what matters. Our response to this crisis has shown the resolve and strength of the human spirit, which is why we will overcome.

The response from the economy and stock market, however, has shown a disconnect between the two. Tragically, 22 million people have filed for unemployment in the past four weeks, nearly wiping out all the jobs created during the record 10-year economic expansion. Historic drops in consumer confidence, retail sales, industrial production, oil prices, and housing starts have shown how quickly our economy has gone from solid growth to virtually stopping in its tracks. Yet, stocks have been soaring the past few weeks. Remember, stocks tend to weaken before the economy, and they tend to lead before the economy turns around. Stocks see light at the end of the tunnel before the economy feels it, and the big move recently may be a sign the economy could turn around later this year.

Small businesses have been impacted the most by the economic crisis, and the government and Federal Reserve actions to bridge the gap to better times are unprecedented. The combined stimulus from fiscal and monetary policy is more than 20% of the value of the entire US economy, as measured by gross domestic product, greatly mitigating the economic hardships. The hurried roll out of the small business loan program wasn’t perfect, but it is helping those businesses.

This recession—though not officially declared yet—is unlike any other. It wasn’t caused by the virus itself, but by the government telling people to stay home in an effort to flatten the curve. The government can’t simply turn on a switch to get things back to normal, but with all of the stimulus making its way through the system, it’s possible this could be one of the shortest recessions ever. First quarter earnings season has begun, and it will be interesting to learn how quickly corporate America anticipates the slowdown ending. Estimates for earnings in 2020 have reduced drastically, but there is still hope that a strong second-half economic rebound could help support a recovery in corporate profits.

More than 2 million people worldwide have been infected by the virus, and we all have been impacted in some way. There are drug companies all around the world working nonstop to find an effective treatment, while Boeing, one of the hardest hit companies during this crisis, said it might start building planes again soon. We aren’t out of the woods yet, and the economic data and headlines may get worse before they get better, but our response to this crisis reinforces our confidence that the future remains bright.

Please stay healthy, and don’t hesitate to contact me if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of April 23, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

LPL # 1-05002504

Dimensional Regional Director Scott Bosworth discusses the impact emotions can have on an investor’s portfolio, citing research and examples from a recent client event.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tracking Number 1-981712

In recent days, the increase in volatility in the stock market has resulted in renewed anxiety for many investors. While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Recent Market Volatility Download

Tracking Number 1-981712

The impact of missing just a few of the market’s best days can be profound, as this client-ready data visualization of a hypothetical investment in the stocks that make up the S&P 500 Index shows.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters. Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tuning Out the Noise Download

Tracking Number 1-981712

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, reach for a bucket.” —Warren Buffett
The battle with COVID-19 rages on, and the headlines continue to get worse. The number of new cases and deaths continues to grow. Individuals and companies are hurting, with even an iconic company like The Cheesecake Factory telling landlords they won’t be able to make their rent payments for April. This current situation is a human crisis, and there is no way to put a value on the lives that have been lost. However, we will get past this pandemic, as we’ve gotten past every other crisis, and we will see better times in the future. As

Warren Buffett stated, when clouds are dark, that could spell opportunity for longer-term investors.
We’re already seeing some good news on the horizon. The number of new cases may have peaked in Spain and Italy, the epicenter of the outbreak in Europe. Here at home, new cases may begin to slow within the next few weeks, while Seattle, one of the first major cities in the United States to have an outbreak, has reached its peak of new cases. Corporate America is seeing major breakthroughs as well, as Johnson & Johnson announced human testing on its COVID-19 treatment should start by September, and a vaccine may be ready by early next year.

While we wait for containment measures to take effect and for an ultimate cure, the immediate impact to the economy has been devastating. More than 3.2 million people applied for unemployment benefits last week, more than five times the previous record, while US gross domestic product (GDP) is expected to take a historic dive. Remember, the economy can stop by either pumping the brakes or hitting a tree. Our economy has hit a tree, and the short- and long-term impacts of this abrupt halt could be felt for a long time to come.

The double-barreled support from the Federal Reserve (Fed) and Washington’s recent $2 trillion fiscal stimulus plan (CARES Act) won’t fix the root of the problem—only doctors and scientists can—but it may help the economy restart more quickly once the pandemic subsides. Fed Chair Jerome Powell noted we very well may be in a recession, but this isn’t a typical recession, as our economy started from a strong position. The $2 trillion CARES Act, totaling more than 9.3% of GDP, provided an additional boost. For reference, the 2008 fiscal stimulus plan was 5.5% of GDP, showing just how much larger this plan is than anything else we’ve ever seen. These measures may be viewed as a bridge for consumers and small businesses to help them get to the other side, and so businesses are positioned to take full advantage when the economy restarts. The combined monetary and fiscal policy action may be the catalyst to propel a historic bounce back for our economy over the second half of this year.

World War I took more than 15 million lives, only to be followed by the pandemic of 1918, which claimed another 50 million. Very few would have expected to see the boom in technological development, economic growth, and the stock market that followed during the “Roaring ‘20s.” It is always darkest right before the dawn, and our resolve and determination will once again shine through. Longer-term investors may want to consider looking for opportunities to invest in an eventual market recovery, as stocks are in the zone where adding to equity exposure could be quite beneficial. Or as Warren Buffett would say, they better get their buckets ready.

Please stay healthy and contact Cornerstone if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of April 1, 2020.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-975747

Joel Hefner explains why investors may prefer some allocation in equities in addition to bonds in order to grow their long-term wealth.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tracking #1-967104

Jake DeKinder, Head of Advisor Communication, explains how capital markets have rewarded investors that are able to tune out short-term noise and stay disciplined over the long-term.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tracking #1-967104

Curious about how markets work? This video explains how security prices are set and how they change based on the collective knowledge of buyers and sellers. Armed with this information, investors will better understand how and why markets work.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tracking #1-967104

Can investors predict when to buy and sell securities? Jim Davis, PhD runs more than 780 tests on data from 15 stock markets to test this theory.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

The Cost of Trying to Time the Market Download

US Equity Returns Following Sharp Downturns Download

Tracking #1-967104