The Days are Long the Years are Short
INVESTMENT STATEMENTS
1st quarter statements have been distributed. The statements show your values from one quarter to the next. This is short term and with March having been one of the steepest 1-month declines in history the negative numbers can be disconcerting. In fact, if you were to review your account(s) with the inclusion of April you would find a much-improved number from the end of March.
When reviewing your portfolio your total deposits versus your current value is more important. As well I like to assess how your portfolio compared to the market. Did it do better or worse and why? I want to make sure you are on the right track for much longer than one quarter.
Nevertheless please do not hesitate to discuss any concerns you may have. It is human nature to react when you see a negative number.
MARKET UPDATE
Current economic data is mainly available from mid-March. It is fair to say that the data that gets released over the course of the next week (for rest of March and part of April) will be some of the worst economic data that we have ever seen. With that said, if April was any indicator as to how markets react to bad economic data (think unemployment numbers), we have no idea how markets will react. Last month was characterized by disbelief that stock prices could rally amidst so much bad news. Nothing seems to make sense in these markets, but the markets offer a long history of this paradox.
In his recent newsletter Nick Murray cites - “Over the last 80 years, the equity market has turned up on an average of 107 days – some three and a half months – before a recession ended… The most terrifying example of this phenomenon is provided by the financial crisis of 2008-09. The market bottomed out on March 9, 2009 at S&P 500 677, yet the recession continued through June. But by June 30, the S&P 500 was already at 919, up 36% from the trough. Wait; it gets worse. The National Bureau of Economic Research did not confirm that the recession had ended in June until September 21, by which date the S&P 500 was at 1,065 – up 57%. And even then, nobody believed it!”
Perhaps a period that gave us the quickest decent from all time highs (March 2020) into a bear market followed by the strongest month in over 30 years (April 2020) has a few more surprises for us. I am definitely not able to provide a prediction regarding which way the next 25% move will be, or what letter of the alphabet the recovery will most resemble, but I do know that you’ve got more upside over-time by being invested than you do in cash.
Your risk tolerance and your time horizon for needing or wanting your money remains paramount in determining the best allocations for your portfolio.
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MEETING REVIEW
I mentioned this in my last newsletter, but it is worth repeating; while we cannot conduct in person meetings - we can do a phone meeting, exchange emails, or schedule a Zoom call.
I anticipate we can conduct in-person meetings when the state of emergency is lifted. Our office building has a full-time cleaner who is disinfecting common and individual offices daily. We can conduct meetings in our large boardroom to best adhere to social distancing guidelines. Also we will schedule meetings with enough time to wipe down all common surfaces before the next meeting.
Continued health and safety to you and your family.
Take care!
Matthew Bishop,Investment Funds Advisor
